The Law Commission of England and Wales’ consultation paper had disclosed the proposal to position digital assets and non-fungible tokens (NFTs) under the U.K. property laws.
The U.K. government is planning to form and initiate a regulatory framework for cryptocurrencies which is not available at the moment.
Having an established and “robust” legal foundation within a “conducive” environment will be fitting for all crypto stakeholders and it is an agenda for the Commission.
Commercial and Common Law Commissioner, Sarah Green has mentioned,
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.
This is because digital assets will continue to evolve and expand as stores of value, forms of payments, equity or debt securities. The crypto-friendly proposal has been constructed in part to help the U.K government to achieve its mission of transforming the country into a global crypto hub.
The commission’s proposals, however, will not apply in Scotland or Northern Ireland as they cater to their individual legal systems. In the previous week, the financial regulators have proposed rules to Parliament that is supposed to recognize stablecoins, these are asset backed cryptos and are legal means of payment.
Stablecoin regulation is on the table for U.K. and the government is also planning a consultation on crypto as investment assets by the end of 2022. With this consultation paper, it shall welcome opinions and viewpoints from legal and tech experts.
The commission will stay away from cryptocurrencies that are just used as a means of payment. The area of focus shall lay on digital assets which can be traded and they are used to represent other assets and also act as a store of value.
The consultation paper also mentions that the present property laws cannot adequately be inclusive of digital assets as they have “many different features” and “unique qualities” as compared to traditional physical assets.
The commission quotes that,
The law must therefore go further to acknowledge these unique features, which in turn would provide a strong legal foundation for the digital assets industry and for users.
To fit in digital assets, the Law Commission is suggesting the formation of a new category called “data objects”. These would keep in account for things composed of data in an electronic form like databases, software, digital records, domain names and also crypto.
There is supposed to be a third category which will have a more detailed account of new, upcoming and idiosyncratic things as per the document.