The Law Commission of England and Wales has published a report on a legal reform that seeks to integrate cryptocurrencies and NFT tokens into its personal property law.
Recently, the Commission presented a 289-page report suggesting the creation of a new category of personal property that includes digital assets, such as cryptocurrencies and NFT tokens.
The introduction of this report represents a significant development in personal property legislation, recognizing the growing importance of digital assets in the modern economy.
The creation of a new category of personal property is recommended
The Law Commission's report, published at the end of July, notes that certain digital assets, including cryptocurrencies and non-fungible tokens (NFTs), can attract personal property rights, and therefore recommended the creation of a new category of assets personal property that recognizes digital assets as a new class of personal property. This is because this new class of digital assets do not easily fit into traditional categories of personal property, such as assets in possession or rights of action.
The recommendation to create this “third category” of personal property, which explicitly recognizes digital assets as property, would provide clarity and legal certainty to digital assets, strengthening the rights of cryptoasset owners and facilitating the resolution of related disputes.
Furthermore, the creation of this new category of personal assets could also have a significant impact on the way digital assets are handled in legal cases, such as bankruptcies, insolvencies and estates, providing a stronger and clearer legal framework for the protection of assets. these crypto assets.
England and Wales consider the unique features of cryptocurrencies and NFTs
Cryptocurrencies and NFT tokens have unique characteristics that distinguish them from physical assets and other property rights. First, the Commission highlighted that these digital assets are inherently intangible, which poses unique challenges in their classification and regulation. Unlike a car or a house, which can be physically touched and transferred, digital assets exist in a virtual space and are transferred through blockchain networks.
In the case of NFTs, the Commission highlighted that these digital assets are unique in nature, as they represent ownership of a specific asset, such as a work of art or a collectible. This means that, unlike fungible assets like cryptocurrencies, each NFT has its own value and characteristics, further complicating its legal treatment.
Therefore, in its legal proposal, the Commission recognizes each of these characteristics and differences and seeks to establish a legal framework that reflects the uniqueness of these digital assets.
“When it comes to cryptocurrencies, the political argument that they should not be recognized as personal property because they are not acceptable is not necessarily logical”, indicated the report.
The Commission recognizes that the growing popularity of cryptocurrencies and NFTs has led to an increase in interest among investors and society in general in these digital assets, accentuating the need to establish a clear legal framework that mitigates uncertainty in the sector. . According to the organization, this could encourage investment and accelerate the development of cryptocurrencies and digital assets. Likewise, by legally recognizing cryptoassets as property, it is expected to foster a safer and more attractive environment for investors, allowing for more sustained market growth.
The Flexibility of Personal Property Law
On the other hand, the presentation of this regulatory proposal highlights the flexibility of personal property law in England and Wales and the jurisdiction's general interest in addressing new developments and needs of users of emerging technologies.
According to experts, England and Wales are taking a proactive approach by recognizing a distinct category of personal property that is better suited to the unique characteristics of digital assets. This degree of regulatory flexibility is crucial, considering the speed with which technologies develop and advance.
In addition to recommending the creation of a new category of personal assets, the Commission also recommends the constitution of a group of experts on the subject, which will assist the courts with the information necessary to better understand digital assets and their legal treatment. This group would ensure that judges have access to the technical and legal expertise necessary to address cases related to digital assets effectively, the Commission stressed. Likewise, the organization addressed the decentralization and autonomy of the Decentralized Autonomous Organizations (DAOs) and the integration of smart contracts in regulatory frameworks.
In a context of global cryptocurrency growth, the initiative presented by the Law Commission of England and Wales could provide the clarity and legal certainty necessary to encourage growth and investment in the cryptocurrency and digital assets industry.
