UK to introduce new law concerning NFTs and Crypto
The Law Commission of England and Wales has proposed that reform legislation is needed for cryptocurrencies and non-fungible tokens (NFTs).
If enacted by the government, crypto would be defined separately within property law and make it easier to process cases — good news for politicians seeking to attract the crypto industry.
The Law Commission’s proposal to the government comes amid an ongoing project to provide clear rules on digital assets, set to happen early November. The paper argues new laws are needed to carve out a space for digital assets — or “data objects” — given how “unique” they are to traditional ones. This would make it easier for UK courts to figure out cases of ownership disputes and hacks, for example.
“It would allow the law to develop by analogy with things in possession or things in action where appropriate, while also recognizing that certain things do not fall neatly within either category,” it said.
For retail investors, the Law Commission hopes clear definitions in property law for digital assets will make it easier to hit back at hacks and scams in court. Commercial and Common Law Commissioner Sarah Green explained why such revisions are needed: “A lot of people just invest in NFTs, but they don’t ask the question ‘what happens when things go wrong?’”
“It’s not clear at all what happens if you hack into my wallet and take my bitcoin or if … this system fails and I can’t access my bitcoin.”
In April, Rishi Sunak – then the UK finance minister and now in the running to become the next Prime Minister – asked the Law Commission to review the UK’s current crypto laws. This was done to accommodate digital assets such as NFTs and crypto.
Last week, financial regulators proposed that Parliament recognise stablecoins as a legal means of payment. In addition, the consultation paper discusses how current laws cannot be applied to digital assets. According to this paper, digital assets have “many different features” and “unique qualities” that distinguish them from traditional assets.