An important bill is currently making its way through the House of Lords. The Property (Digital Assets etc) Bill, drafted by the Law Commission is an elegantly simple bill outlined in full below:

“Objects of personal property rights

A thing (including a thing that is digital or electronic in nature) is not prevented from being the object of personal property rights merely because it is neither— (a) a thing in possession, nor
(b) a thing in action.”

The bill confirms that certain digital assets – such as crypto tokens – can attract property rights even if they do not fit into the two existing categories of personal property in English and Welsh law. Creating an additional category of property is a response to technological developments and a lack of clarity about the property rights for people and businesses who use digital assets. The intention is to bring practical benefits for those individuals and businesses.

This bill deliberately does not state what digital assets fall within a “third category” of personal property rights or how the law will treat them. Instead, these details will be developed by the courts, who can deal with issues on a case-by-case basis. This is preferable to setting out firm rules in legislation, which would be less able to respond flexibly to new circumstances and technological developments. Personal property law has always been developed by the courts through our common law rather than in legislation. The bill supports this established approach.

I spoke in the second reading debate and focused on my longstanding interest in this blockchain technology (including a 2017 report on DLT for Public Good), the opportunities for the UK, a nod to other jurisdictions and some questions for the Minister…

“By 2030, tokenisation of real-world assets will be in excess of $10 trillion.”

“The opportunities for the planet are extraordinary. The opportunities for the UK are immense, not least because of our financial services ecosystem, our fantastic higher education, our start-up and technology communities, and the greatest gift of all: English common law.”

“We have a unique opportunity in this country: as individuals, to assist with financial inclusion, through to financial market transformation, the dematerialisation of capital markets, and a transformation of our economy and society for the benefit of all, if we get it right.”

“We have already seen the role the EU has played with MiCA and its definition of cryptoassets, in a prescriptive code, and how that is currently evolving. Perhaps more pertinent to the UK are the examples in the UAE—Dubai—and Saudi and, indeed, the approach of the Hong Kong Monetary Authority. This is a global game, and the UK needs to decide what role we want to play within it. The Bill is short in nature but could be extraordinarily significant in impact.”

The bill may seem small, but it is incredibly significant, and we need to consider whether the existing two-state classification of property law is in fact sufficient for the task in hand, and if not, what case law and evidence we are bringing to bear?