Consultation opens for UK crypto law reform

A consultation paper by the Law Commission of England and Wales has been published following calls from the UK government to review the law on digital assets.

The government wants to make sure that legislation can accommodate the technology as it evolves.

The law of England and Wales has gone some way in accommodating the rise of digital asset technologies, the Law Commission said, but it concluded that there were several key areas requiring legal reform, to recognise and protect the rights of users and maximise the potential of digital assets.

A core tenet of the consultation paper centered around how existing personal property law does – and should – apply to digital assets.

“Because they are not tangible, some digital assets have many different features to traditional physical assets and to other intangible things that can attract property rights,” said the Commission. “Their unique qualities mean that many digital assets do not fit easily into traditionally recognised private property law categories or definitions.”

It added: “Our proposals are designed to ensure that the law remains dynamic, highly competitive, and flexible, so that it can support transactions and other arrangements involving digital asset technology.”

The proposed reforms are also intended to help achieve the UK government’s goal for England and Wales to become a global hub for digital assets, with a particular focus on crypto-tokens and crypto-token systems.

“Digital assets such as NFTs and other crypto-tokens have evolved and proliferated at great speed, so it’s vital that our laws are adaptable enough to be able to accommodate them,” said professor Sarah Green, the law commissioner for commercial and common law. “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 Commission’s paper is due to close on 4 November 2022.

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