A third, distinct category of personal property may be required to cope with digital assets such as cryptocurrencies and non-fungible tokens in English law, the independent law review body proposes today. In a much-awaited consultation paper, the Law Commission of England and Wales provisionally suggests that the law should explicitly recognise a category of legal objects alongside 'things in possession' and 'things in action'.
The paper also suggests giving courts discretion to award remedies denominated in crypto-tokens rather than fiat currency 'in appropriate cases'.
Overall the commission's 545-page paper agrees with previous expert opinion - including that of the master of the rolls - that the law of England and Wales is largely 'sufficiently resilient, flexible and iterative' to accommodate the crypto economy. Introducing the paper, Professor Sarah Green, law commissioner for commercial and common law, said reform should 'focus on developing the right legal foundations to support these emerging technologies, rather than rushing to impose structures that could stifle their development.'
However the commission identifies a gap in the legal status of digital assets: as intangible pieces of information, they risk not being considered 'property' in private property law. Yet cryptographic products can also be rivalrous - a unit of currency secured by blockchain can be spent by only one person at a time. The property law relating to such assets could be clarified by declaring them 'data objects' it suggests. This could be achieved either iteratively through court decisions or by stautory intervention.
The review was carried out following a request by the government as part of its ambition for the jurisdiction of England and Wales to become a global hub for digital assets, and in particular, for crypto-tokens and crypto-token systems.
Green said: '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.'
Consultation on the proposals closes on 4 November.