On 27 June 2023, the Law Commission published its final report on digital assets, which sets out recommendations for reform and development of the law on digital assets with the aim of securing the UK’s position as a global crypto hub.
In March 2020, the UK Government asked the Commission to review the law on crypto-tokens and other digital assets and to consider whether the law should be reformed to ensure that it could accommodate such assets. The analysis, recommendations and conclusions in the Commission’s final report were informed by the detailed responses it received to its subsequent Call for Evidence, published in May 2021, and consultation paper, published in July 2022.
In the final report, the Commission concludes that the common law of England and Wales is, in general, sufficiently flexible and already able to accommodate digital assets and, therefore, any law reform should be through further common law development where possible. It recommends:
- Targeted statutory law reform only to confirm and support the existing common law position, or where common law development is not realistically possible.
- Making arrangements for the provision of further guidance from industry experts which would support both the common law and statute.
- Creating a panel of industry experts who can provide guidance on technical and legal issues relating to digital assets, in order to ensure that courts can respond sensitively to the complexity of emerging technology and apply the law to new fact patterns involving that technology.
- Providing market participants with legal tools that do not yet exist in England and wales, such as new ways to take security over crypto-tokens and tokenised securities. The Commission recommends that this work is undertaken by a multidisciplinary project team.
These recommendations for reform and common law development aim to create a clear and consistent framework for digital assets that will provide greater clarity and security to users and market participants. They are also intended to support the Government’s goal of attracting technological development to cement the position of England and Wales as a global financial hub for crypto-tokens and crypto-assets.