The United Kingdom continues to ramp up its efforts to establish a cryptocurrency regulatory framework, with various proposals being fronted. In this line, the region’s Law Commission has published a consultation paper focusing on determining crypto ownership to protect users’ rights.
The consultation paper published on July 28 indicates that there need to establish guidelines to recognise and protect cryptocurrencies in a digitised world while stressing that digital assets play an important role in modern society.
In a nutshell, the consultation paper overviews how UK’s property law does and should apply to cryptocurrencies. The commissions acknowledged that the intangible characteristics of digital assets do not allow them to be classified as traditional properties.
Recognising crypto’s unique features
The paper notes that in advancing crypto regulation, the law must consider the unique crypto features as part of establishing a crypto-friendly environment.
“Some digital assets (including crypto-tokens and crypto assets) are treated as objects of property by market participants. Property and property rights are vital to modern social, economic, and legal systems and should be recognised and protected. <…> Reforming the law to provide legal certainty would lay a strong foundation for developing and adopting digital assets,” the commission said.
Part of the proposals also centers around the transfer of digital assets, with the commission stating that rules of title transfer in existing property should apply to crypto-tokens. Notably, the proposals support the transfer even in cases where a new or modified crypto-token is created.
UK’s push to be a global crypto hub
Additionally, the draft law points out that if an investor buys a token in good faith, unaware of any other party’s claim to it, they have the right to retain ownership of the token in contention. Furthermore, the proposal calls for clarifying the requirements for custody of cryptocurrencies.
The commission maintained that its proposals would enhance the UK’s goal of becoming a global cryptocurrency hub by designing dynamic, flexible, and competitive laws for the sector.
“It’s important that we focus on developing the right legal foundations to support these emerging technologies, rather than rushing to impose structures that could stifle their development,” said Professor Sarah Green, Law Commissioner for Commercial and Common Law.
The commission has set the deadline for receiving feedback on the paper for November 4.