Crypto law proposals could help boost UK while regulators lag behind, experts say

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Proposals to reform property laws to account for cryptoassets would give the UK a competitive advantage, experts say, and could assuage concerns that Britain is falling behind on regulating the sector.

Britains Law Commission has suggested that laws around personal property should be changed to include a distinct, third category for so-called data objects, which would include non-fungible tokens and cryptocurrencies.

Adam Sanitt, from law firm Norton Rose Fulbright, added that they would provide greater legal clarity on digital assets. The Commission, an independent advisory body, said that if adopted, the reforms could help crypto investors claim back money lost in hacks or scams through legal action, and equip courts with the ability to decide token ownership.

Despite the government announcing in April that it wants to make the UK a global crypto hub, progress on setting a clear regulatory and legal framework for the industry has been slow. While the European Union is moving apace with its Markets in Crypto Assets rulebook, critics including former chancellor Philip Hammond, have warned that Britain is lagging behind.

The scale of the task shouldnt be underestimated, but should the government get it right, it should provide the UK a competitive advantage, certainly from the viewpoint of regulatory certainty,” said Charley Cooper, managing director at blockchain firm R3.

He noted that despite existing laws that could be relied upon in relation to the ownership of digital assets, none of it was designed with these products in mind specifically. The Commission’s paper “helps frame new laws that would attempt to address this, said Cooper who is also a former chief operating officer of the US Commodity Futures Trading Commission.

The Law Commission said that the proposal is partly aimed at helping the UK fulfill the Treasurys ambition of making the country a crypto hub. While it is not a government body, policies put forward by the Commission are typically adopted by the government. The proposals would not apply in Scotland or Northern Ireland, which have separate legal systems.

The proposal to recognize a third category of property is key, added Matthew Nyman, a fintech lawyer with CMS. Historically, there have been only two categories and the recognized need for a third points to a paradigm shift brought about by digital assets.

It comes after financial regulators proposed rules to parliament recently that would establish stablecoins as legal means of payment, while the government is also planning a consultation on crypto for the end of the year. The Treasury is also consulting on having the Bank of England step in if large stablecoins collapse.

To contact the author of this story with feedback or news, email Alex Daniel

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