The UK Law Commission has proposed that cryptocurrencies be classified as “data objects” alongside digital assets through reforms aimed at encouraging industry growth and legal protection for cryptocurrency users.
A new public consultation published by the Law Commission of England and Wales could see digital assets and cryptocurrency legal classifications reformed, with the Law Commission inviting legal experts, cryptocurrency users, and technologists to contribute to a review of existing legislation.
The consultation proposal, published on July 28 and open until November 4, highlights the rapidly evolving nature and highly varied use cases of cryptocurrencies and digital assets, which are currently used in a wide range of applications that include as stores of value, means of payment, lending instruments, and tokenized digital representations of rights to securities and equities.
Crypto Reforms Seek to Clarify Legal Status of Cryptocurrencies
Reforms focused on providing institutions, businesses, and individuals would deliver ““wider recognition and legal protections for digital assets” in the developing blockchain sector, with the consultation paper scrutinizing the application of personal property laws to digital assets and the potential establishment of a new category within the asset class.
The Law Commission of England and Wales has issued four key proposals, with the first outlining the creation of a distinct legal category of legal property designed to adapt to the unique properties of digital assets. The new category, referred to as “data objects,” would cover a wide range of cryptocurrencies, tokens, and digital assets.
Other proposals included within the consultation proposal include the collection of different opinions regarding the development and implementation of frameworks through which the new classification could be integrated into existing law alongside a focus on clarifying the legal definition of ownership and transactions for digital assets.
UK Government Focused on Fostering Digital Asset Industry Growth
Statements issued by Law Commissioner for commercial and common law Sarah Green outline the broader goal of the proposal, emphasizing the importance of encouraging growth within the industry:
“Our proposals aim to create a strong legal framework that offers greater consistency and protection for users and promotes an environment that is able to encourage further technological innovation,”
The consultation proposal follows the release of a draft law in the UK that would see regulators provided with expanded authority regarding the use of stablecoins as a payment method.