Crypto Assets Bill

On 12 September 2024, the Property (Digital Assets etc) Bill and accompanying documents were published after being introduced to the House of Lords. The Bill aims to establish that certain digital assets can constitute property under common law. It follows the government’s acceptance of the Law Commission’s recommendations, including setting up an expert group on digital asset control. The Bill applies to England and Wales, coming into force two months after being passed. Major statutory reforms are considered unlikely to resolve all issues related to digital assets, so further development will rely on common law. The second reading of the Bill is yet to be scheduled.

Overview of the Bill

The Bill addresses personal property law in England and Wales, allowing certain assets to attract property rights even if they do not fit into the traditional categories of personal property: “things in possession” (tangible items) and “things in action” (enforceable rights). It implements the Law Commission’s recommendation to confirm that a thing can have legal property status even if it does not belong to these traditional categories, in response to emerging assets like crypto-tokens.

Commentary on the provisions

Clause 1 of the Bill allows assets, including digital or electronic items, to be recognized as capable of attracting personal property rights even if they are neither “things in action” nor “things in possession.” However, this does not imply that all items are property—only those that satisfy the general criteria for personal property can be. The Bill does not define specific assets, such as crypto-tokens, as property nor detail the implications of such recognition. Instead, it aims to “unlock” the common law’s development, allowing courts to determine property rights for new types of assets. Although the Bill mentions digital or electronic items like crypto-tokens, it remains open to recognizing other emerging assets without specifically defining them as property.

Clause 2(1) states that the Bill applies to England and Wales. Clause 2(2) provides that the Bill will come into effect two months after it is passed.

Commencement

The Bill’s implementation is pending consent from the Law Officers, which would allow it to come into force immediately after Royal Assent. Clause 2(2) will be updated if consent is granted.

Financial Implications of the Bill

The Bill has no financial implications and does not require the use of specific assets. It aims to provide clarity and legal certainty regarding the treatment of certain assets.