UK recognises digital assets as property

The legal landscape of personal property in the UK has undergone a historic transformation with the granting of Royal Assent to the Property (Digital Assets etc) Act on 2 December.

This one-clause law formally establishes that digital and electronic assets can exist as a category of personal property in their own right, resolving years of doctrinal uncertainty for the crypto industry.

Hitherto, English law recognised only two categories: 'things in possession' (physical assets) and 'things in action' (rights enforceable in court). Cryptocurrencies, which are neither physical objects nor mere contractual IOUs, had remained in limbo. Judges and lawyers had had to improvise, forcing analogies with precedents built for ships or actions to handle tokens locked by private keys.

New Statutory Basis for Justice

The Act puts an end to this "interpretive gymnastics" by creating a third category of personal property. It asserts that a digital object is not excluded from being property just because it fails the tests of the two pre-existing categories.

• For Citizens and Investors: The change becomes clearer 'when things go wrong'. If Bitcoin or Ethereum are stolen, the process of tracking, freezing and recovery becomes more streamlined. The law now gives courts a clear statutory basis for treating these assets as property. In the event of an exchange's bankruptcy, the classification of customer assets becomes more predictable, reducing the risk of coin holders becoming mere unsecured creditors.
• For the Financial Market: The biggest long-term impact is on collateralisation. The new legal clarity strengthens the possibility for digital assets to function as eligible collateral in structured financing. It also improves transparency for clients of custodians (custodians) and simplifies disputes over the ownership and control of on-chain assets.

The reach of this law goes far beyond the borders of the UK, as a significant proportion of global corporate contracts and fund structures are based on English law.

This new legal basis is also crucial in view of the Bank of England's ongoing consultation on the stablecoins systemic, ensuring that the courts have a solid basis for treating coins as recoverable and transferable property.

The Act does not introduce new regulations (such as taxes or licences for custodians), but it does resolve the conceptual mismatch. The UK, with this move, positions itself as one of the most advanced Western jurisdictions in the statutory definition of digital property, surpassing, for clarity on property rights, regulatory frameworks such as the EU's MiCA.