The Law Commission of England and Wales is proposing a number of law reforms to provide wider recognition and legal protections for cryptocurrency and digital asset users.
The institution is reviewing existing legislation on digital assets at the request of the British government in an effort to accommodate the space as it continues to grow in reach and use. The Law Commission announced the call for public consultation from legal experts, technologists and users on Thursday.
The proposal highlights the evolving nature and multi-faceted use of cryptocurrencies, nonfungible tokens (NFTs) and other digital assets. Cryptocurrencies are used as a means of payment, store of value and as a digital representation of ownership or rights to equities and debt securities.
The Law Commission seeks to deliver “wider recognition and legal protections for digital assets” to give a wider range of people, businesses and institutions access to the burgeoning sector. The consultation paper examines how personal property laws apply to digital assets and why they should be classed under this umbrella but in a unique category.
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Four key proposals are put forward, starting with explicitly defining a distinct legal category of personal property to accommodate the unique features of digital assets under the banner of “data objects.”
The second will be creating different options for the development and implementation of “data objects” around existing law. Clarifying law around ownership and control of digital assets as well as transfers and transactions are the final two recommendations put forward.
A statement from Commercial and Common Law commissioner professor Sarah Green highlighted the institution’s focus on the unique features of the technology in order to provide a strong legal foundation for the ecosystem to develop organically:
“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.”
The proposed legal reforms are in line with governmental plans for England and Wales to become a hub for cryptocurrency and digital asset systems. The Law Commission’s deadline for public responses to its consultation paper is set for November 4, 2022.