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The new Regulation Bill in the UK will classify cryptocurrency and non-fungible tokens (NFTs) as personal property.
Currently, there are two categories of property in UK law: things in possession and things in action. The former includes assets such as precious metals or money, while the latter includes shares and debts.
Cryptocurrency does not fall under either of these categories.
How Will the New Bill Impact the UK Crypto Market?
This is not the first attempt to regulate cryptocurrency through legislation in the UK. The new bill is linked to the Law Commission’s 2023 report, where legal experts made recommendations regarding digital assets.
They noted that cryptocurrencies are difficult to classify under things in possession or things in action. Still, they decided to regulate them as personal property and introduce a new category.
A press release from Parliament states that the new cryptocurrency law will help protect holders from fraudulent schemes. Additionally, digital assets may be considered in other court cases related to property (e.g., divorce settlements).
However, it remains unclear how information will be collected or what the new law will require of crypto exchanges.
What’s the Third Category for Cryptocurrency?
The Law Commission’s 2023 report states that cryptocurrency will fall under this third category in the following cases:
- It is composed of data represented in an electronic medium, including in the form of computer code, electronic, digital, or analog signals,
- It exists independently of persons and the legal system,
- It is rivalrous.
However, it should be noted that the Law Commission’s report is advisory in nature, meaning the new law for cryptocurrency may differ from it.
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In order to better protect investors, the UK is seeking to classify cryptocurrencies and NFTs as personal property.
