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Digital assets: UK Law Commission publishes final report on digital assets being a new kind of “thing in action”

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Authored by: Simon Deane and Chris Wong

The UK Law Commission (“Law Commission”) has completed a report on potential reforms of law in England and Wales in relation to digital assets in those jurisdictions (“Report”).

With the digital economy growing in importance globally, governments have been trying to find ways to update existing legislation and introduce new laws, to ensure that users and customers of new products and services and other market participants are able to use such products and services in a legally safe and sound environment.

Given the rapidly changing environment surrounding digital assets, the UK government asked the Law Commission to explore the adequacy of existing law and personal property rights in relation to certain aspects of the digital economy, as well as to offer recommendations to address the remaining legal uncertainties and complexities about the law and digital assets.

The Law Commission’s Report noted the flexibility of existing legal arrangements meant that, generally speaking, digital assets were already recognised as “things in action” to which personal property rights applied, even though they may not fall within the two commonly acknowledged categories of “things in possession” (i.e. things of which a person has possession) and “things in action” (i.e. things to which the person has a right). However, to ensure that certainty can be provided when dealing with such assets, the Law Commission recommended that digital assets be recognised as a distinct category of personal property, to ensure that the property rights therein can be adequately protected.

The above principles reflect the growing recognition of digital assets as property across the world, including in Hong Kong, in the recent case of Re Gatecoin Limited (In Liquidation) [2023] HKCFI 914, which held that cryptocurrencies constituted property under Hong Kong law.

The Law Commission’s full Report can be found here.

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Simon Deane

Consultant | Banking and Finance

Email or call +852 2825 9209

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