Legal Status of Crypto Assets: A New Bill in UK Parliament
A groundbreaking bill just came to light in the UK parliament. The bill, proposed to the Parliament as innovative, seeks to protect legal owners of Bitcoin and other digital assets. It is an important step forward in recognizing digital holdings, such as cryptocurrencies and NFTs, to be treated under British law like personal property.
Our team of Crypto Accountants has researched the background of the new proposed bill. Let’s understand it in detail.
What Does the New Proposed Bill Suggest?
A Property (Digital Assets etc.) Bill, published on 11 September 2024, will formally categorize Bitcoin and non-fungible tokens, among other 'digital assets,' as personal.
This will be the first time British law has categorized any asset this way. Individuals owning them will enjoy increased legal protection from potential digital asset problems. It ensures they can be treated like other personal assets, such as a car or bank account.
This is because there was obscurity surrounding the law of digital belongings in England and Wales. It led to confusion, mainly in litigation cases or if frauds occurred about the theft of the owners' digital assets.
The new law will end this legal grey area by ensuring more protection and rights for owners of digital belongings under the law.
Boosting Britain's Chances in the Global Crypto Space
The bill also ensures that the UK remains at the forefront of the global tech market. The UK wishes to top the list in the newly developing cryptocurrency and blockchain world by legislatively defining digital assets.
This bill should boost confidence for investors and businesses and secure the UK's top position in the crypto market.
Protection from Litigation and Fracas in Court
Besides digital assets' legal standing, the law would protect people from fraud and scams. This is especially important, considering that frauds and scams about cryptocurrencies and digital assets are rising.
The bill will also simplify one way for judges to deal with complex matters that entail digital assets. For example, in divorce settlements or business disputes where digital holdings are concerned, this law will provide guidelines on how to treat such assets.
Supporting the Legal Industry in the UK
One factor the Minister of Justice, Heidi Alexander, mentioned was that the bill was of monumental importance to legal services in the UK, which remains a highly crucial part of the country's economy.
For instance, the legal sector in the UK generates £34 billion annually. The country must be informed of new technologies to maintain its global leadership position.
She said this bill would ensure that the UK legal system can manage the complexity of dealing with digital assets in increasing proportions, thus attracting more business and investments to the sector.
Why This Bill Is So Important?
This new bill is expected to attract even more companies and investors to the UK since it will make them more transparent about dealing with digital assets.
The law will not only be necessary for the global expansion of the cryptocurrency market but also establish a legal system that respects and guards the property rights of digital assets.
It will also keep the UK as the "law of choice" for international business and legal matters. That’s mainly because English law currently governs £250 billion worth of global mergers and acquisitions and 40% of global corporate arbitrations.
What Are Digital Assets?
Digital assets can mean anything from the following:
Cryptocurrencies, for example Bitcoin and Ethereum
Non-fungible tokens (NFTs), such as digital art or collectables
Digital files and records
Carbon credits
However, the bill is fundamentally a crypto tokens bill, which falls under the subcategory of digital assets.
A New Class of Property
There exist at common law in England and Wales two classes of property that have been recognised:
Things in possession involve real-life items, like cash, cars or gold.
Things in action are legal rights, such as debts or shares.
The new bill introduces a third type of property, specific digital assets considered personal property. This is a significant trend because the owners of digital assets enjoy protection with more precise rights under the same legal framework as other types of property.
Last Word!
The Property (Digital Assets etc.) Bill is a major step in modernizing the legal treatment of digital assets within the UK.
It will be a good move towards ensuring the UK plays an important role in the future of digital assets and continues being one of the premier addresses for business and law advice concerning blockchain technology and cryptocurrencies.
For more information related to crypto tax compliance and due diligence, contact the Crypto Accountants.