UK Law Commission recommends ‘distinct’ legal category for crypto

Law Commission of the United Kingdom Advocating for Separate Classification of Personal Possessions

The Law Commission of the United Kingdom is advocating for the establishment of a separate classification of personal possessions to safeguard the singular traits of digital currencies and digital assets.

The body put forward the recommendation, along with three other key points, as a result of a directive from the British government to examine how the legal systems of England and Wales can incorporate cryptocurrencies, non-fungible tokens (NFTs), and other digital assets.

The most important suggestion made by the commission was to create a different category of personal property specifically for digital assets. They did not define precisely what would be included in this classification, as they felt that the British common law should be used to decide which digital assets would fit into it.

In an announcement shared with Cointelegraph, the commission expressed their conviction that the creation of a new personal property category would enable a “nuanced approach” in the acknowledgment of digital assets ranging from cryptocurrencies to digitized instruments, such as carbon emission credits or export quotas.

The Law Commission has also proposed the creation of an industry-specific committee composed of technical experts, legal professionals, academics, and judges to provide “non-binding advice” to courts on various legal matters and aspects pertaining to the sector.

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The suggestion also includes the establishment of a custom-made legal framework to help in the operation and implementation of security arrangements.

The last suggestion is to make legislative changes to determine if certain digital assets should be included under the U.K.’s Financial Collateral Arrangements Regulations of 2003.

In October 2022, the Ministry of Justice asked the Law Commission to launch an examination of international legal issues connected to the cryptocurrency industry.

In March 2023, the U.K. Treasury and Home Office declared intentions to firmly regulate the cryptocurrency sector in order to impede criminal use of cryptocurrencies.

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