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

The Law Commission has published a consultation paper which contains provisional law reform proposals to ensure that the law recognises and protects digital assets (including crypto-tokens and cryptoassets) in a digitised world

Download the consultation paper (July 2022) here.

Download a summary of the consultation paper here.

 

We request responses to the consultation by Friday 4 November 2022. Responses to the consultation may be submitted using an online form. Where possible, it would be helpful if this form were used. Alternatively, comments may be sent by email to digitalassets@lawcommission.gov.uk.

We are holding public consultation events on the digital assets paper throughout October; please see below for details.

 

The problem

Digital assets are increasingly important in modern society. They are used for an expanding variety of purposes — including as valuable things in themselves, as a means of payment, or to represent or be linked to other things or rights — and in growing volumes. Electronic signatures, cryptography, smart contracts, distributed ledgers and associated technology broaden the ways in which digital assets can be created, accessed, used and transferred. Such technological development is set only to continue.

Some digital assets (including crypto-tokens and cryptoassets) are treated as objects of 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, our consultation paper argues that certain aspects of the law now need reform. This will ensure that digital assets benefit from consistent legal recognition and protection, in a way that acknowledges the nuanced features of those digital assets

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.


The project

The UK Government has asked the Law Commission to make recommendations for reform to ensure that the law is capable of accommodating both crypto-tokens and other digital assets in a way which allows the possibilities of this type of technology to flourish.

We have already begun work on this issue in on the context of electronic trade documents; see link above.

Our digital assets project builds 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).

 

The consultation paper

We published our consultation paper on digital assets on 28 July 2022. We argue that the law of England and Wales has gone some way to accommodate the rise of digital asset technologies. However, we consider that there are several key areas that require law reform, to recognise and protect the rights of users and maximise the potential of digital assets.

The consultation paper examines how existing personal property law does — and should — apply to digital assets (including crypto-tokens and cryptoassets). Because they are not tangible, some digital assets have many different features to traditional physical assets and to other intangible things that can attract property rights. Their unique qualities mean that many digital assets do not fit easily into traditionally recognised private property law categories or definitions.

The consultation paper argues the law must therefore go further to acknowledge these unique features, which in turn would provide a strong legal foundation for the digital assets industry and for users. Through these reforms, the legal system would help to create an environment that is more conducive to digital assets and their markets.

Our proposals are designed to ensure that the law remains dynamic, highly competitive, and flexible, so that it can support transactions and other arrangements involving digital asset technology.

The reforms also aim to help to achieve the UK Government’s stated goal of the jurisdiction of England and Wales becoming a global hub for digital assets, and in particular, for crypto-tokens and crypto-token systems.

The consultation paper seeks views and feedback from legal experts, technologists and users. The deadline for responses is 4 November 2022.

The consultation paper is available here.

Responses to the consultation may be submitted using an online form at: https://consult.justice.gov.uk/law-commission/digital-assets-consultation. Where possible, it would be helpful if this form were used. Alternatively, comments may be sent by email to digitalassets@lawcommission.gov.uk.

The consultation paper was informed by responses received to a call for evidence on digital assets which we published in April 2021. We also published an interim update paper in November 2021. Both can be accessed at the bottom of the page, together with copies of the responses received to the call for evidence.

 

Practitioner and market participant roundtables 

We are holding a number of public consultation events. The first three public consultations are practitioner and market participant roundtables which we are hosting throughout October. These will provide an opportunity to discuss and share initial responses and reactions to our digital assets consultation paper. 

Three separate events will take place, with each considering different aspects of the consultation paper. Registration will allow dial-in access (dial-ins will be sent out separately after registration). Once we have assessed interest, we will be in touch to offer a limited number of attendees an opportunity to attend in-person.  

We are extremely grateful to the organisations who have agreed to provide accommodation to host these events. 

Please click here for more information on how to register/attend. 

If you are interested in attending one or more session(s), please follow the relevant Eventbrite links below. 

1. Custody Consultation

  • This roundtable will focus on issues relating to the custody of crypto-tokens — broadly those issues described in Chapters 16 and 17 of the consultation paper. 
  • Date/Time: 4 October 2022, 12:00 – 14:00 (London time).
  • Register here

2. Collateral Consultation

  • This roundtable will focus on issues relating to collateral arrangements in respect of crypto-tokens — broadly those issues described in Chapter 18 of the consultation paper. 
  • Date/Time: 11 October 2022, 12:00 – 14:00 (London time). 
  • Register here.

3. ‘Third Category’ Consultation

  • This roundtable will focus on the consultation paper’s proposal for a third category of property, how this change in the law should be implemented and other ancillary issues — broadly those issues described in Chapters 4, 5 and 10-15 of the consultation paper. 
  • Date/Time: 20 October 2022, 11:00 – 13:00 (London time). 
  • Register here.

Public Consultation 

We will also host a general public consultation event on 26 October 2022 from 16:00 to 17:00 (London time). This event will be online-only and will give participants an opportunity to hear more about the digital assets consultation paper and to ask questions. If you are interested in attending, please register here. Dial-in details will be sent out separately after registration. 

Academic and judiciary roundtables 

We will also be running separate roundtable discussions for academics who are active and/or interested in the topics covered by the digital assets consultation paper and for members of the judiciary. For more information please contact: digitalassets@lawcommission.gov.uk.

Contact

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

Related projects

You may also be interested in our work on the following:

Electronic trade documents

Smart contracts

DAOs

Conflict of laws and emerging technology

Documents and downloads

Project details

Area of law

Commercial and common law

Commissioner

Professor Sarah Green