On 28 July 2022, the Law Commission of England and Wales published a consultation paper on the recognition and protection of digital assets. The consultation paper recommends law reform to recognise a third category of personal property – referred to as ‘data objects’ – in addition to things in possession (such as physical objects) and things in action (such as contractual rights). The consultation paper acknowledges the flexibility of English law to accommodate digital assets within existing legal principles (including crypto-tokens and cryptoassets). However, the Law Commission recommends reform to ensure ‘data objects’ are treated consistently under English law and, thus, to promote greater legal certainty.
The Law Commission proposes three criteria that a thing must exhibit in order to fall within the proposed third category of personal property, namely, it must:
- be composed of data represented in an electronic medium, including in the form of computer code, electronic, digital or analogue signals;
- exist independently of persons and exist independently of the legal system; and
- be rivalrous (i.e. be incapable of ‘double spend’, or simultaneous use for different purposes).
The consultation is open for responses until 4 November 2022.
A more detailed review of the consultation paper can be viewed on our FSR and Corporate Crime Blog, here