UK Government Introduces New Bill to Classify Cryptocurrency as Legal Property in England and Wales

The UK government has introduced a new bill to Parliament to provide some clarity on the legal status of cryptocurrencies. The bill seeks to classify several types of digital assets as property under the law.

The new Property (Digital Assets, etc) Bill will cover digital assets, including cryptocurrency, non-fungible tokens (NFTs) like digital art and real estate, as well as carbon credits. Before now, digital items were not included in English and Welsh property law. This created a legal grey area for adherence to specific laws.

Official confirmation of digital assets as property has far-reaching implications that affect several industries, including online gambling. Cryptocurrency adoption has evolved such that many players can now visit a Telegram casino to enjoy their favourite gambling games using digital assets like Bitcoin (BTC) and USDT. These types of gambling platforms provide attractive perks through crypto support, including instantaneous deposits and withdrawals, as well as enhanced security provided by blockchain technology. However, assets owned by players may be involved in legal cases where property distribution is central to the case.

The current law provides two property categories: “things in possession,” like money and cars, and “things in action,” like shares or debts. The new bill seeks to add a new “thing” category to cover digital belongings and grant them personal property rights. If enacted, the bill will provide legal protection to individual and corporate entities who are victims of fraud. It will also help the administration of justice, allowing judges to efficiently preside over cases where the ownership of these digital belongings is in dispute.

“It is essential that the law keeps pace with evolving technology, and this legislation will mean that the sector can maintain its position as a global leader in cryptoassets and bring clarity to complex property cases,” said Justice Minister Heidi Alexander.

The bill is a direct response to a 2023 report commissioned by the Ministry of Justice. The report aimed to determine any legal hindrances to the potential classification of digital assets as property under English and Welsh law. Also, the report sought to determine possible solutions where these hindrances exist.

Among other things, the report noted that common law regarding crypto is certain and only unclear in highly nuanced cases. The report also made two important conclusions. Firstly, it recognizes that some digital assets may not easily be classified within traditional categories of things that directly affect personal property rights. However, it says this relative uncertainty does not prevent said assets from attracting personal property rights.

The second conclusion is the report’s resignation that existing common law “cannot give market participants sufficient legal certainty” regarding cryptocurrencies. According to the report, this is beyond legal resolutions and involves the formulation of policies and regulations. The conclusion includes a recommendation for a “bespoke statutory legal framework” such as the new bill introduced.

In April, the UK government updated legislation seeking to better secure its crypto landscape. The government has given the National Crime Agency (NCA) and the police more powers to confiscate or destroy cryptocurrency assets used by criminals. According to the NCA’s National Assessment Centre, illicit crypto transactions connected to the UK hit £1.2 billion in 2021.