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Writer's pictureJames Ross
Jul 302 min read

UK Law Commission Paves the Way for Digital Asset Recognition as Property

Under English law, the UK Law Commission has taken a significant step in solidifying the legal status of digital assets, such as crypto-tokens. In a supplemental report to its 2023 findings, the Commission has reaffirmed its recommendation to introduce legislation establishing a "third category" of personal property to accommodate these unique assets.



Key Takeaways:


  • Digital Assets are Property: The report confirms that crypto-tokens, and potentially other digital assets like voluntary carbon credits, can be owned and are subject to property rights. This provides a clear legal foundation for these assets, equating their status to traditional forms of property like cars or houses.

  • The Third Category: Traditionally, personal property in English law fell into two categories: tangible "things in possession" and intangible rights called "things in action." Digital assets, however, don't neatly fit into either category. The proposed third category addresses this gap, recognising the unique nature of digital assets and ensuring they receive appropriate legal protection.

  • Rivalrousness: The concept of rivalrousness, where one person's use of an asset excludes others, is highlighted as a critical factor in determining if a digital asset qualifies as property. Crypto-tokens, being unique and exclusive, meet this criterion.

  • International Alignment: The UK's approach is consistent with developments in other common law jurisdictions and international legal frameworks, demonstrating a global movement towards recognising digital assets as property.


What This Means for Businesses and Individuals:


  • Legal Certainty: The proposed legislation will clarify and provide certainty for businesses and individuals dealing with digital assets, facilitating informed decision-making and secure transactions.

  • Enhanced Protection: By classifying digital assets as property, owners gain more protection against theft, fraud, or loss, boosting investor confidence and encouraging further investment in this sector.

  • Regulatory Framework: This legal recognition paves the way for a more comprehensive regulatory framework for digital assets, addressing issues like taxation, consumer protection, and financial crime.

  • Market Growth: This legislation's clarity is expected to attract investment and innovation, fostering the growth of the UK's digital asset market.

  • Dispute Resolution: Clear legal guidelines will streamline digital asset dispute resolution processes, leading to fairer and more efficient outcomes.


The Law Commission's report and the proposed legislation mark a significant milestone in the evolution of digital asset law. By recognising the unique nature of these assets and providing them with a clear legal status, the UK is positioning itself as a leader in the global digital economy.



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