In order to be considered a new category digital assets must comprise digital information.
The Law Commission of England and Wales is a statutory, independent body charged to review and update the law is currently evaluating existing laws regarding digital assets as attempt to regulate a industry that has grown so rapidly it is referred to as an Wild west in the eyes of European Union officials. On behalf of the British government and the British government, it has proposed that the Law Commission has proposed legislative reforms that will provide greater recognition and legal protection to users of digital assets. A Consultation on the subject will seek responses on or before November 4.
It’s vital that we concentrate on creating the appropriate legal frameworks to help assist in the development of these technologies, instead of rush to establish regulations that may hinder the development of these technologies, said Professor Sarah Green, Law Commissioner for Commercial and Common Law.
Legal title issues to cryptocurrency have been brought to the forefront with the recent spate of bankruptcies resulting from the crash of crypto.
The recommendations will adjust the law to emerging technologies, and safeguard its users. The hope is that they can help the UK to become a global center to store digital data.
The most important suggestion is the idea that the third type of personal property, referred to as data objects should be incorporated into the law. English law currently recognizes two types of personal property: items that are in the possession (tangible objects) and things in motion (property which can be claimed by legal action or proceeding).
Because the digital asset aren’t tangible and don’t fit in any one of the categories A third category which addresses their characteristics directly will define their character more precisely and adapt any future changes in the law that are based on meet the needs of the digital realm.
The report constantly refers to crypto-tokens but is intended to cover all forms in digital properties that fit under those definitions of data objects. This includes databases software, digital records, software as well as domain names. If the law is implemented specific property rights will be applicable to crypto-tokens providing owners with more security in relation to these digital assets.
The law regarding the ownership of digital assets suggests the concept of control instead of possession should be applied to data objects. Since tangible objects such as NFTs are not physically owned and owners cannot transfer them by using private keys The Commission suggests that control is the best analogy to describe the relationship between a data object’s the owner.
The report offers suggestions for transfers of digital assets. The report recommends that the regulations for the transfer of title in the case of existing property should be applicable to crypto-tokens, even if the transfer creates a brand new or modified crypto-token. It differentiates between the actual transfer of crypto-tokens through an electronic ledger as well as the transfer of title to legal property, which are not always the identical.
Another possibility is that an individual purchases an item in good faith, and is unaware of any claim by another party to it, they’ll keep ownership to the coin.