Current project status
The current status of this project is: Pre-consultation.
List of project stages:
- Analysis of responses
- Initiation: Could include discussing scope and terms of reference with lead Government Department
- Pre-consultation: Could include approaching interest groups and specialists, producing scoping and issues papers, finalising terms of project
- Consultation: Likely to include consultation events and paper, making provisional proposals for comment
- Policy development: Will include analysis of consultation responses. Could include further issues papers and consultation on draft Bill
- Reported: Usually recommendations for law reform but can be advice to government, scoping report or other recommendations
Ensuring the law recognises and protects digital assets in a digitised world
Digital assets are increasingly important in modern society. They are used for an expanding variety of purposes, including as means of payment for goods and services or to represent other things or rights, and in growing volumes. Cryptoassets, smart contracts, distributed ledger technology and associated technology have broadened the ways in which digital assets can be created, accessed, used and transferred. Such technological development is set only to continue.
Digital assets are generally treated as property by market participants. Property and property rights are vital to modern social, economic and legal systems and should be recognised and protected as such. While the law of England and Wales is flexible enough to accommodate digital assets, certain aspects of the law need reform to ensure that digital assets are given consistent recognition and protection.
For example, the law recognises that a digital asset can be property and that a digital asset can be “owned”. However, it does not recognise the possibility that a digital asset can be “possessed” because the concept of “possession” is currently limited to physical things. This has consequences for how digital assets are transferred, secured and protected under the law.
Reforming the law to provide legal certainty would lay a strong foundation for the development and adoption of digital assets. It would also incentivise the use of English and Welsh law and the jurisdiction of England and Wales in transactions concerning digital assets.
This work described on this page is linked to our proposals for the digitalisation of trade documents such as bills of lading and bills of exchange, which also require to be “possessed” in the eyes of the law.
The Law Commission has been asked by Government to make recommendations for reform to ensure that the law is capable of accommodating both cryptoassets and other digital assets in a way which allows the possibilities of this technology to flourish. Our work will consider whether digital assets should be “possessable”. This could have significant consequences for the functioning and development of the market in digital assets.
We have already begun work on this issue in on the context of electronic trade documents; see link above.
Our digital assets project will build on our conclusions on the concept of possession in our electronic trade documents project. It will also build on the conclusions of the recent Legal Statement on the Status of Cryptoassets and Smart Contracts by the UK Jurisdiction Taskforce of the LawTech Delivery Panel (the UKJT).
Call for evidence
We published our call for evidence on digital assets on 30 April 2021.
The call for evidence is the first step in the digital assets project. Its primary function is to seek views about, and evidence of, the ways in which digital assets are being used, treated and dealt with by market participants. It also seeks views on the potential consequences of digital assets being “possessable”.
The purpose of the call for evidence was to give stakeholders and market participants an opportunity to provide their input to us ahead of the publication of a consultation paper on digital assets, which will make proposals for law reform. We are now in the process of preparing our consultation paper. Stakeholders and market participants will have an opportunity to respond to the proposals in our consultation paper, which will be published in 2022.
The call for evidence does not contain any proposals for law reform.
The call for evidence closed on 30 July 2021.
To contact us, or to be added to our mailing list and receive updates about this project, please email firstname.lastname@example.org
You may also be interested in our work on the following:
Area of law
Commercial and common law
Professor Sarah Green