England Law Commission recommends reforming property laws for digital assets

The Law Commissions of England and Wales have proposed reforming existing laws, especially private property law, to protect cryptocurrency users and maximize the potential of the technology.

Suggestions can be found in the consultation paper Release July 28 seeking input from industry stakeholders until November 4.

According to the Law Commission, English and Wales law is “flexible enough to accommodate” digital assets, but there are some important areas that need to be reformed. The Commission argues that the property law should be applied to digital assets.

In its consultation paper, the Law Commission proposes to create a new and clear category of personal assets for so-called “data objects”. This includes cryptocurrencies and non-fungible tokens (NFTs).

In press releaseThe Commission said that the functioning of digital assets is significantly different from that of traditional physical assets. Therefore, in order to enable the private property law to be effectively applied to digital assets, authorities have proposed to classify them into a new category.

The Legal Commission said it would provide a “strong legal foundation for the digital asset industry and users” by creating a new category of assets. The proposal added that the law was designed to ensure that it was “dynamic, competitive and flexible.”

Once the reforms are implemented, it will be easier for courts to decide on a claim of ownership of the token.

In the agreement, the Legal Committee said there was controversy in favor of allowing the court to grant damages in cryptocurrencies. However, the committee did not formally recommend it.

Professor Sarah Green, a legal counsel for commercial law and common law, said:

Our proposal aims to create a strong legal framework that enhances user consistency and protection and promotes an environment that can facilitate further innovation.

It is important to focus on developing the right legal basis to support these new technologies, rather than rushing to impose structures that can impede development.