The Property (Digital Assets etc) Bill was introduced to Parliament on 11th September 2024. The new law shows a government agenda of crypto adoption in the UK, with these currencies brought into the regulatory scope of regulated financial assets. The new law presents significant changes to the proprietary rights of cryptocurrency holders, which will affect millions in the UK.  

What are Digital Assets?

Digital assets form a broad category. These assets include digital files, email accounts, carbon credits, NFTs, and cryptocurrency.

Why is Crypto Back in the News?

Over the last few months, the cryptocurrency market has shown significant growth and volatility. In November 2024, Bitcoin’s price surged above $100,000, partially driven by Donald Trump’s presidential election and advocacy for cryptocurrency.

The surge in market cap for major cryptocurrencies is widespread and indicates further institutional investment and interest from retail investors in the crypto sector. However, this has not helped prevent the volatility commonly associated with cryptocurrencies. Experts, therefore, advise extreme caution when investing in financial products lacking intrinsic value.

How Does this Affect Me?

The cryptocurrency market in the UK is projected to continue upwards. According to Statista, it is expected to grow by 10.27% annually from 2024 to 2028, and the UK market size is therefore projected to hit $520.2 billion by 2032.

A key factor in this projection is the regulatory clarity present in the UK industry, a clarity that has not been enjoyed in many developed countries. The Financial Conduct Authority has implemented regulations that aim to categorise ‘legitimate’ crypto firms over dubious and ‘illegitimate’ firms to increase consumer protection and create a positive environment in which trust in crypto can flourish.

The Property (Digital Assets etc) Bill

In response to the growing adoption of cryptocurrencies in the West, the UK government introduced the Property (Digital Assets, etc.) Bill. 

But why?

Justice Minister Heidi Alexander said:

“It is essential that the law keeps pace with evolving technologies, and this legislation will mean that the sector can maintain its position as a global leader in crypto assets and bring clarity to complex property cases.”

The Current Law

The law, as it stands, categorises property into two areas:

Things in Possession: These tangible items can be physically held or possessed, such as gold, cash, art, and vintage cars.

Things in Action: These items cannot be physically possessed but represent a right or claim, such as debts, shares, or intellectual property.

Cryptocurrency does not fit into these definitions because it is intangible and decentralised, which has created a huge grey area in the sector. As a result, there is ambiguity over the ownership, inheritance, and theft of cryptocurrencies. The Bill seeks to resolve this ambiguity.

The New Law

The new law aims to create a third category of property to encompass crypto, granting it significant and unique protection. As a result of the Bill, crypto holders will be able to seek legal recourse in the event of disputes over the ownership of this form of property.

Divorce

A key area where we will see this Bill in action is hostile divorce settlements. The new Bill will guide the courts in consistently resolving complex divorce disputes where the true ownership of holdings is contested.

NFTs

NFTs are commonly expressed as digital artwork. As a result of the Bill, artists and collectors can register their ownership rights. The court could resolve disputes over ownership and counterfeiting more clearly.

Commerce

Businesses can confidently integrate digital assets, knowing their ownership and security are legally protected in the UK. Companies that adopt blockchain technology or accept cryptocurrencies as payment now have legal support to ensure the ownership and protection of their digital assets. This includes using cryptocurrencies for global transactions, securing data with blockchain, or turning physical assets into digital tokens.

Debt Recovery

Recovering cryptocurrency debts is complicated because digital assets do not fit into traditional property categories. This leaves businesses unsure about how to pursue payment when cryptocurrencies like Bitcoin or Ethereum are involved.

The Bill would enable businesses to treat digital assets as part of their property more easily in bankruptcy proceedings, giving creditors a more straightforward route to recover any value tied up in digital holdings. If the Bill passes, it will provide much-needed clarity and security for businesses handling digital asset-related debt recovery.

How Can We Help?

Whilst we do not deal with Cryptocurrency regulation in this firm, our expertise in commercial law, debt recovery, and asset protection means we are well-positioned to guide you through the new legal framework.

If you have questions about how the Property (Digital Assets etc) Bill might affect your business or if you’re facing challenges in recovering debts, we’re here to help.