The Law Commission in the United Kingdom is advocating for the establishment of a unique and separate classification of personal property to accommodate and safeguard the distinct characteristics of cryptocurrencies and digital assets.
In response to a government mandate to assess how existing legal frameworks in England and Wales can accommodate digital assets, the Law Commission has put forth several key recommendations.
One significant recommendation is the creation of a distinct category of personal property specifically designed for digital assets. The commission intentionally refrained from setting clear boundaries for this proposed category, as it believes that the existing common law in the U.K. should be used to determine the inclusion of various digital assets within this framework.
According to Cointelegraph, the commission emphasized that establishing a new personal property category would enable a nuanced approach in recognizing a broad spectrum of digital assets, ranging from cryptocurrencies to digitized instruments like carbon emission credits or export quotas.
In addition, the Law Commission proposed the formation of an industry-specific panel comprising technical experts, legal professionals, academics, and judges. This panel would offer non-binding advice to courts on various legal matters and considerations pertaining to the digital asset sector.
As part of their recommendations, the Law Commission proposes the establishment of a customized legal framework to streamline the functioning and enforcement of collateral agreements.
Another key recommendation involves introducing statutory law reforms to provide clarity on whether specific digital assets should be included within the purview of the Financial Collateral Arrangements Regulations of 2003 in the United Kingdom.
The Law Commission embarked on a review of the legal challenges associated with the cryptocurrency industry in response to a request from the Ministry of Justice in October 2022.
In March 2023, the U.K. Treasury and Home Office unveiled plans to implement robust regulations to address the illicit use of cryptocurrencies, emphasizing their commitment to curbing criminal activities within the crypto sector.