The U.K.’s Law Commission highlights four major recommendations to reform laws relating to cryptocurrency use and ownership.
The United Kingdom’s Law Commission is pushing for the creation of a ‘distinct’ category of personal property to accommodate and protect unique features of cryptocurrencies and digital assets.
The body made the recommendation alongside three other key points following a mandate from the British government to carry out a common law analysis unpacking how legal frameworks in England and Wales can accommodate cryptocurrencies, nonfungible tokens (NFTs) and other digital assets.
Chief among the recommendations is the creation of a new and distinct category of personal property for digital assets. The Commission deliberately omitted clear boundaries for the proposed category, highlighting its belief that common law in the U.K. should be used to determine which digital assets would fall under this basket.
An announcement shared with Cointelegraph stressed the Commission’s belief that a new personal property category would allow for a ‘nuanced approach’ in recognising digital assets ranging from cryptocurrencies to digitized instruments, including carbon emission credits or export quotas.
The Law Commission has also suggested the establishment of an industry-specific panel of technical experts, legal practitioners, academics and judges to give ‘non-binding advice’ to courts on various legal issues and considerations relating to the sector.
The creation of a ‘bespoke legal framework’ is also part of the recommendation which aims to facilitate the operation and enforcement of collateral arrangements.
The final recommendation calls for statutory law reforms to clarify whether specific digital assets will fall under the scope of the U.K.’s Financial Collateral Arrangements Regulations of 2003.
The Law Commission began a review of international legal challenges relating to the cryptocurrency sector in October 2022 at the request of the Ministry of Justice.
The U.K. Treasury and Home Office has since announced plans to ‘robustly’ regulate the cryptocurrency sector in an effort to curb criminal use of cryptocurrencies in March 2023.