Digital assets

Current project status

  • 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 is ready for an increasingly digitised world

The problem

In the commercial world, trade and transactions are already extensively digitised, and yet legislation implemented more than a century ago is preventing businesses from adopting entirely paperless processes.

For example, the reluctance of English law to recognise the possibility of “possessing” an intangible asset means that such assets are excluded from several significant legal processes and protections, for which possession is a pre-requisite. This means that commercial assets are currently afforded very different legal treatment depending on whether they are in digital or physical/paper form. An electronic document cannot, for example, constitute a document of title under the Bills of Exchange Act 1882. This can cause considerable commercial difficulties, particularly in the context of international trade finance.

The project

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.

In the first instance, the Law Commission will consider the issue of possession, particularly with regard to documents of title, documentary intangibles and negotiable instruments. Our work will 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.

Next steps

We aim to publish a consultation paper in the first half of 2021.

To contact us, or to be added to our mailing list and receive updates about this project, please email digitalassets@lawcommission.gov.uk

You may also be interested in our work on smart contracts, which can be viewed here.

Project details

Area of law

Commercial and common law

Commissioner

Professor Sarah Green