UK Law Commission recommends creating a 'distinct' legal category for crypto

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The Law Commission of the United Kingdom has presented a set of recommendations to reform laws concerning the use and ownership of crypto and digital assets. The key proposal is establishing a distinct legal category to accommodate the unique characteristics of these digital assets and provide them with adequate protection.

In response to a government mandate, the Law Commission conducted a comprehensive analysis of the existing legal frameworks in England and Wales to assess their compatibility with cryptos and non-fungible tokens (NFTs). Alongside the proposal for a new legal category, the Commission put forward three other significant recommendations.

The primary recommendation is creating a specific personal property category for digital assets. Notably, the Commission purposely refrained from defining clear boundaries for this category, suggesting that determining what assets fall within it should be left to the common law system in the UK.

The Law Commission believes establishing this new category would enable a more nuanced approach to recognising and classifying digital assets, including cryptos and digitised instruments such as carbon emission credits or export quotas.

Another recommendation is forming an industry-specific panel consisting of technical experts, legal professionals, academics, and judges. This panel would offer non-binding advice to courts on various legal issues and considerations related to crypto, providing specialised insights and expertise.