England Law Commission Proposes Crypto Recognition

The Law Commission of England and Wales is recommending a series of legal changes to give users of cryptocurrencies and digital assets more recognition and legal safeguards.

At the British government’s request, the institution is evaluating the law already in place regarding digital assets in an effort to keep up with the field’s expanding usage and reach. On Thursday, the Law Commission made a public announcement inviting legal professionals, technologists, and users to provide input.

The proposal emphasizes how cryptocurrencies, nonfungible tokens (NFTs), and other digital assets are constantly changing and have many different uses. In addition to being used as a medium of exchange and a store of value, cryptocurrencies are also employed as a digital representation of rights to ownership of equity and debt instruments.

The Law Commission wants to provide “wider recognition and legal protections for digital assets” so that more individuals, organizations, and institutions can participate in the developing market. The consultation document looks at how personal property rules relating to digital assets and explains why they ought to be categorized under this heading but in a different way.

What Are the Suggestions Being Put Forth?

The first of the four major suggestions is to clearly define a distinctive legal category of personal property called “data objects” to account for the special characteristics of digital assets.

The second will involve coming up with various choices for creating and applying “data objects” related to current law. The final two suggestions are to clarify the law regarding transfers and transactions as well as ownership and control of digital assets.

In order to establish a solid legal framework that would allow the ecosystem to flourish naturally, the organization has focused on the distinctive qualities of the technology, according to Commercial and Common Law commissioner professor Sarah Green’s statement:

“Digital assets such as NFTs and other crypto-tokens have evolved and proliferated at great speed, so it’s vital that our laws are adaptable enough to be able to accommodate them.

“Our proposals aim to create a strong legal framework that offers greater consistency and protection for users and promotes an environment that is able to encourage further technological innovation.

“It’s important that we focus on developing the right legal foundations to support these emerging technologies, rather than rushing to impose structures that could stifle their development. By clarifying the law, England and Wales could reap the potential rewards and position itself as a global hub for digital assets.”

The government’s objectives for England and Wales to develop into a center for bitcoin and digital asset systems are consistent with the proposed legal revisions. On November 4, 2022, the Law Commission will accept public comments on its consultation paper.