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The UK’s Law Commission has outlined new proposals to reform digital asset laws, including non-fungible tokens (NFTs).
Transaction law clarifications and new categories under property law are among the changes that the Law Commission of England and Wales has suggested to overhaul the crypto regulatory framework.
“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,” said Sarah Green, law commissioner for commercial and common law at the commission, outlining its recommendations.
The government had asked the Law Commission to review the law on digital assets to ensure that it can accommodate the assets as they continue to evolve and expand.
Its proposals aim to deliver wider recognition and legal protections for digital assets, allowing a more diverse range of people, groups and companies to interact online and benefit from them.
In addition, the reforms aim to help the government achieve its goal of the UK becoming a global hub for digital assets and, in particular, for crypto-tokens and their systems.
Recent attempts to encourage this have included plans to amend payments law to account for stablecoins, and HM Treasury even announced the minting of its own NFT.
“Digital assets such as NFTs and other crypto-tokens have evolved and proliferated at great speed, so it’s vital that our laws are adaptable enough to be able to accommodate them,” said Green.
Although the law of England and Wales has gone some way to accommodate the rise of new technologies such as crypto, the commission argues that there are several key areas that require law reform, to recognise and protect the rights of users and maximise the potential of digital assets.
Defining ownership
In its new consultation paper, which seeks views from legal experts, technologists and users, the Law Commission examines how existing personal property law does, and should, apply to digital assets.
As they are not tangible, digital assets have many different features to traditional physical assets. Their unique qualities mean that many digital assets do not fit easily into current private property law categories or definitions.
The consultation paper argues the law must therefore go further to acknowledge these unique features, which in turn would provide a strong legal foundation for the digital assets industry and for users.
Through these reforms, the legal system would help to create an environment that is more conducive to digital assets and their markets.
The commission’s proposals are designed to ensure that the law encourages competition and innovation, as well as being flexible enough to support transactions and other arrangements involving the technology.
The consultation on the proposals will run until November 4.
