On Thursday, the Law Commission, which is an independent body in the UK, said that private property law should have a new category added to it.
It said that this new category should be used for digital assets, such as cryptocurrencies, which are being used for representing other assets, or for making payments.
Authorities all around the globe have recently become proactive when it comes to introducing regulations for the crypto assets sector.
European lawmakers have dubbed the space as the ‘Wild West’, as it has grown rapidly, but remains quite unregulated for now.
2020 and 2021 were great years for cryptocurrencies, such as Bitcoin, which saw a massive surge in their prices, but they have recorded a sharp decline this year.
There has also been a rapid proliferation in non-fungible tokens, or NFTs, as they are called, which are assets based on blockchain that represent digital files like images.
When Rishi Sunak was still the finance minister in Britain back in April, he had stated that he wanted to make the UK a global crypto technology hub.
In fact, he had gone as far as asking the Law Commission to see if digital assets could be accommodated in the current laws.
On Thursday, the Law Commission disclosed that there are a number of digital assets, which include NFTs, which cannot be easily incorporated into current laws governing the private property.
The Law Commissioner for common and commercial law, Sarah Green said that their proposals are aimed at developing a strong legal framework.
This would be able to provide protection and greater consistency to the users and would also create an environment that promotes further technological innovation.
Another proposal from the Commission was to add a third category by the name of ‘data objects’ to the ‘things in possession’ that already exist, such as gold, which is a tangible asset.
The addition could also be made to ‘things in action’, such as shares or debt in a firm. These are all personal property categories.
In order to qualify for the third category, a digital asset should have electronic data and fulfill other criteria as well.
For instance, one person should use the digital asset at a time. The Commission’s proposals have been put in a paper that is open to public consultation.
According to experts, property rights are of the utmost importance, more than contractual rights, because it is possible to assert the former against anyone.
As for the latter, they can only be asserted the other person part of the contract. A draft law had been set out in Britain in the previous week.
This law was aimed at giving its regulatory authorities the power to regulate the use of stablecoins for payment purposes.
Moreover, there is another consultation scheduled for later in the year aimed at regulating the other type of crypto assets that exist.
Likewise, Europe is also working on MiCA, the Markets in Crypto Assets law in order to govern the crypto market in the continent.