The Property (Digital Assets etc.) Bill - Legal Protection for Ownership of Digital Assets

The rise of digital assets across a wide range of sectors has led to The Property (Digital Assets etc.) Bill to be introduced in Parliament which means that cryptocurrency, non-fungible tokens such as digital art, and carbon credits will be classed as personal property under law.  It is estimated that English law governs a significant number of global mergers and acquisitions, and 40 per cent of global corporate arbitrations.  The Bill means that it will ensure Britain maintains its pole position in the emerging global crypto race by being one of the first countries to recognise these assets in law. 

The new law rises from a recommendation made by the Law Commission of England and Wales, and will give legal protection to owners and companies of such assets and by defining ownership this will assist against fraud and scams, helping deal with complex cases where digital holdings are disputed or form part of settlements, for example in divorce cases.

English law currently recognises two categories of personal property,

·         things in possession -  meaning tangible items such as jewellery or a car

·         things in action -  intangible items such as debt and intellectual property. 

The Bill introduces a third category, assets that are "digital or electronic in nature," such as cryptocurrencies and non-fungible tokens (NFTs). These digital assets will be considered personal property under the Bill and give legal protection to individuals and businesses targeted in frauds and scams involving cryptocurrency and other digital assets.  The decision to introduce the Bill is in response to the Ministry of Justice Law Commission’s report in 2023 to identify the barriers to recognition of digital assets under the law of England and Wales.

Joanna Bailey, head of the banking and financial fraud department, commented “Owners of digital assets gain enforceable rights against theft, fraud, and unauthorised interference.  Digital assets can also be included in bankruptcy and insolvency proceedings and treated as part of an individual’s estate”  Joanna further pointed out “the UK aims to be a leader in digital asset regulation, reinforcing international frameworks like the EU's Markets in Crypto-Assets Regulation (MiCA) and aims enhance the attractiveness of UK for global investment and a hub for fintech innovation, whilst at the same time providing stronger more effective legal recourse for the theft of crypto assets.”

Justice Minister Heidi Alexander said.  “…It is essential that the law keeps pace with evolving technologies and this legislation will mean that the sector can maintain its position as a global leader in cryptoassets and bring clarity to complex property cases…” 

Regulation of crypto assets varies considerably worldwide, as Britain aims to provide a safe jurisdiction for dealings in crypto assets there must be a legal regime that protects ownership in a sector that is subject to scams and fraud.  The Bill provides room for the common law to evolve in defining what qualifies as a digital asset. This approach accommodates new technologies as they arise without over-specific legislation.   By allowing digital assets treated on par with traditional forms of property it could feasibly reduce litigation risks and provide clearer guidance for courts in disputes involving such assets.

As technology evolves the law will have to keep pace in this rapidly progressing sector to maintain the protections that The Property (Digital Assets etc.) Bill introduces.  However, legal sector will now better equipped to respond to new technologies and courts will have a clearer basis to handle disputes involving digital assets, such as issues of theft, fraud, or ownership claims.  Legal remedies, including injunctions to freeze stolen assets, will be more enforceable.

The legal position of digital assets, particularly cryptocurrency, across the world is far from consistent. Some jurisdictions enthusiastically embrace digital assets such as cryptocurrency, whilst others have banned it.  Countries with differing approaches to digital asset regulation may face challenges in reconciling their laws with the UK's framework.

The recognition of digital assets as possessions could lead to "regulatory arbitrage," where businesses gravitate toward jurisdictions with more favourable rules.  This could also lead to global disagreements regarding how digital assets are treated which could complicate cross-border transactions and litigation.  However, the UK’s desire to be increasingly 

The Property (Digital Assets etc.) Bill is a landmark in modernising property law for the digital age. In England and Wales, it will boost legal clarity, commercial confidence, and innovation. Globally, it is likely to inspire similar reforms, driving legal and regulatory convergence. However, challenges around enforcement, over regulation, and international coordination remain key hurdles to address.

Giambrone and Partners financial fraud team believe that the Bill, when enacted, could have a significant impact on the UK's reputation as a global leader in digital assets and financial technology.

Joanna Bailey is a partner who heads our banking and financial fraud litigation department.

Joanna frequently leads the litigation against financial institutions involved in cryptocurrency trading disputes, as well as Forex investment issues and regulatory investigations and has some considerable success in retrieving our clients' funds lost in fraud.

She has developed a range of strategies both to find the assets of the individuals perpetrating the fraudulent schemes and restore the funds to our clients. As well as recognising culpability in the organisations facilitating (but not associated with the fraud), by failing to undertake adequate due diligence.

Joanna led the first case in Europe where proceedings were served on Persons Unknown connected with two digital wallets over the blockchain by non-fungible token or ‘NFT’ in a cryptocurrency fraud. Following this ground-breaking case Joanna was named as Lawyer of the Week in the Financial Times.

Joanna is highly experienced in high-value out-of-court settlement negotiations and has in-depth knowledge of the Civil Procedure Rules as well as English common law.

If you would like to know more about protecting your digital assets such as cryptocurrency please contact Joanna's clerk Joseph Crick on JC@giambronelaw.com or please click here