UK Law Commission recommends creating a separate legal category for cryptocurrencies.

The United Kingdom’s Law Commission is advocating for the creation of a unique category of personal property to accommodate and protect the distinctive characteristics of cryptocurrencies and digital assets.

This recommendation, along with three others, was made in response to a directive from the British government to conduct a common law analysis of how legal frameworks in England and Wales can accommodate cryptocurrencies, nonfungible tokens (NFTs), and other digital assets.

The primary recommendation is to establish a new and distinct category of personal property for digital assets. The commission purposely did not define clear boundaries for this proposed category, emphasizing its belief that the common law in the U.K. should determine which digital assets would fall under it.

An announcement shared with Cointelegraph emphasized the commission’s belief that a new personal property category would allow for a nuanced approach in recognizing digital assets, ranging from cryptocurrencies to digitized instruments such as carbon emission credits or export quotas.

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The Law Commission has also proposed the formation of an industry-specific panel consisting of technical experts, legal practitioners, academics, and judges. This panel would provide non-binding advice to courts on various legal issues and considerations related to the sector.

Related: UK crypto bill reaches final stage, on track for passage

The recommendation also includes the creation of a bespoke legal framework to facilitate the operation and enforcement of collateral arrangements.

Finally, the commission calls for statutory law reforms to clarify whether specific digital assets fall within the scope of the U.K.’s Financial Collateral Arrangements Regulations of 2003.

In October 2022, at the request of the Ministry of Justice, the Law Commission initiated a review of international legal challenges associated with the cryptocurrency sector.

Since then, the U.K. Treasury and Home Office have announced plans to regulate the cryptocurrency sector robustly to combat criminal use of cryptocurrencies by March 2023.

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