The Law Commission of England and Wales is to propose a number of legislative reforms to provide broader legal recognition and protections for users of cryptocurrency and digital assets.
The institution is reviewing existing digital asset legislation at the request of the UK government in a bid to adapt to the space as it continues to grow in reach and usage. The Law Commission has announced the call for public consultation from lawyers, technologists and users on July 28.
The proposal highlights the scalable nature and multifaceted use of cryptocurrencies, non-fungible tokens, and other digital assets. Cryptocurrencies are used as a means of payment, a store of value, and as a digital representation of ownership or rights in stocks and debt securities.
The Law Commission seeks to provide “broader 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 classified under this umbrella, but in a single category.
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Four key proposals are advanced, starting with explicitly defining a separate legal category of personal property to account for the unique characteristics of digital assets under the banner of “data objects”.
The second will be to create different options for the development and implementation of “data objects” around existing law. Clarifying the law on ownership and control of digital assets as well as transfers and transactions are the last two recommendations put forward.
A statement from the Commissioner for Commercial and Common Law, Professor Sarah Green, highlighted the institution’s focus on the unique characteristics of technology to provide a strong legal basis for the ecosystem to grow. organically:
“Our proposals aim to create a strong legal framework that offers greater consistency and protection to users and promotes an environment capable of encouraging new technological innovations.”
The proposed legal reforms are in line with government plans for England and Wales to become a hub for cryptocurrency and digital asset systems. The Law Commission deadline for public responses to its consultation document is set for November 4, 2022.