Think you own your crypto? A new UK law would make sure

British law isn’t entirely clear on whether crypto counts as personal property.

That’s according to the UK Law Commission, which argues that while most investors presume that when they buy crypto, “they acquire property rights in the same way as when they buy, say, a watch or a laptop.”

“As the law currently stands, that is not necessarily the case,” the influential legal body said in a new report on Tuesday.

The report came alongside a remedy: A new law draft to cement digital assets’ legal status as personal property.

That could be huge for the some 4.7 million Britons estimated to be holding crypto.

“This will enable courts to determine a number of issues,” the report said.

If passed, the law will help to iron out how crypto is treated in bankruptcies, succession planning, or theft cases.

Flexible law

The commission is an independent body responsible for reviewing British legislation. It started to investigate whether English and Welsh property laws apply to digital assets in 2020.

At the time, then-Chancellor of the Exchequer Rishi Sunak expressed ambitions to turn the UK into a crypto hub as Brits invested more.

The commission decided in 2023 that, for the most part, the law of England and Wales is flexible enough to cover crypto.

That means that any asset — from Bitcoin to non-fungible tokens and certain kinds of digital contracts — can be considered personal property, without Parliament having to write new and extensive laws.

However, there was one small area of uncertainty — it wasn’t clear if crypto fit under the two categories of personal property recognised by UK law.

Those two categories are tangible things — cars, laptops, handbags — and intangible things, such as contracts, stocks, and debt.

The bill that now goes to Parliament to be passed into law aims to rectify this.

Without this clarification, courts could try to lump crypto assets with intangible assets, Adam Sanitt, head of disputes knowledge, innovation, and business support EMEA at law firm Norton Rose Fulbright, told DL News in March.

That’s problematic because intangible assets are creations of the legal system, while crypto is not.

“How digital assets are dealt with by the law, what rights you have to them, how you own them, how you transfer them to other people — that treatment is different, because digital assets don’t exist by virtue of the legal system but independent of it,” Sanitt said.

The money in your bank account, for instance, is a legal creation. The government could pass a law to void it.

If the UK passed a law banning Bitcoin, however, Bitcoin would not cease to exist.

Sanitt said: “That’s why digital assets are so important — the government and the legal system cannot take them away from you.”

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by dlnews