The Law Commission of England and Wales has recommended the classification of digital assets, including cryptocurrencies, under a new category of personal property. In its final recommendation report to the government, the commission, composed of lawyers, judges, and professors, outlined four specific recommendations.
Firstly, it proposed the enactment of legislation to establish a distinct category of personal property that recognizes and protects the unique features of cryptocurrencies. While the commission acknowledged that current personal property laws are flexible enough to include cryptocurrencies, it emphasized the need for a separate classification due to their distinct characteristics.
Secondly, the commission suggested the creation of an industry-specific panel comprising technical experts, legal practitioners, academics, and judges. This panel would provide expert advice to the court on complex legal matters involving cryptocurrencies. The aim is to enhance the court’s understanding and decision-making in cases related to digital assets.
Moreover, recommendation focused on the development of a tailored legal framework for crypto collateral arrangements. The commission deemed the existing laws inadequate and proposed the establishment of a comprehensive legal structure that facilitates the entering into, operation, and enforcement of collateral arrangements concerning crypto-tokens and crypto-assets. This framework aims to address the limitations currently associated with using cryptocurrencies as collateral.
Lastly, the commission called for law reforms to define the applicability of certain cryptocurrencies to the Financial Collateral Arrangement Regulations (FCAR). It acknowledged that many digital assets would likely fall outside the scope of FCARs and recommended statutory changes to create a clear and consistent framework for digital assets. Such a framework would provide greater clarity and security to users and participants in the market.
Justice Minister Mike Freer expressed the importance of equipping the legal system to handle the complexities of these technologies and assured that the government would carefully consider the commission’s findings. The goal is to strengthen the legal system and ensure it remains well-prepared to address the challenges posed by emerging technologies in the future.
