Law Commission consultation on “Digital assets as personal property” – Law Society response

We welcome the opportunity to respond to the Law Commission’s consultation on the draft causes for digital assets as personal property.

As in our response to the Commission’s previous consultation on digital assets, our submission underscores the importance of limited statutory reform for digital assets, balanced with common law development to determine specific parameters.

We look forward to continuing to engage with the Law Commission in this vital area of law to support the growing digital agenda and the progress made to date.

Our view

Overall we support the draft bill, and agree with the Law Commission which reflects that a “thing” is capable of being the object of personal property rights even though it is neither “a thing in possession”nor “a thing in action”, and that a third category of legal rights should be introduced.

We also agree that further questions related to what falls within this third category and what personal property rights attach to third category things, along with related consequences, are matters for the courts to develop through the common law.

Positive impacts

We consider the positive impact of the bill to be increased legal certainty with regards to the existence of a third category of personal property and further confirmation as established by case law that digital assets can be recognised by law as property.

We agree with the Law Commission that the bill would make disputes more efficient by enabling parties to focus on the substantive question about legal treatment of crypto-tokens or other third category things.

Potential risks

As with any introduction of new legislation, we foresee that in the short-term there may be a lack of clarity around what falls within the third category introduced by the bill, and what personal property rights attach to third category things as well as the consequences of introducing in law this third category.