Bill to confirm legal status of digital assets introduced to UK Parliament
Published on 18th March 2025
Despite offering greater market clarity, certainty and confidence, some tech developments will be left to common law
The Property (Digital Assets etc.) Bill was introduced on 11 September 2024 for its first reading in the Houses of Parliament. The aim of the bill is to remove restrictions that prevent digital assets from being recognised as personal property.
Currently, in English law, there are only two types of property: things in possession (usually tangible items such as a car) and things in action (that is, property that cannot be physically possessed but can only be claimed or enforced through court action, such as debt or contractual rights).
The bill, which is very succinct, aims to acknowledge the emergence of new types of assets (such as non-fungible tokens and cryptoassets) and would establish that something may be capable of attracting property rights even if it does not fit into the two current property types – a "third type".
The current draft of the bill, however, does not address the legal implications associated with this third type of asset and what may be used as evidence of ownership of these assets.
While the government has yet to set out its proposed timings for the implementation of the bill, the recent decision in D'Aloia v Persons Unknown confirmed that equitable remedies did apply to digital assets, and provided further clarification on the defences applicable to crypto assets. The decision set out a comprehensive summary of the application of existing legal principles to digital assets, including tracing, constructive trusts and unjust enrichment.
Osborne Clarke comment
The bill will provide greater market clarity and certainty regarding the legal status of digital assets in England and Wales and provide greater confidence that the UK government recognises the importance of the law keeping pace with technological developments. However, it is clear that certain further developments will be left to common law and, therefore, uncertainty in relation to certain areas could remain for some time.
The D'Aloia decision and other recent case law makes it clear that focus on anti-money laundering compliance in relation to digital assets is critical from a regulatory perspective and in terms of impact on legal defences.
