The Property (Digital Assets) etc Bill has moved to second reading after it was formally read for the first time in the House of Commons this week.
Further detail of this Bill and proposed changes to the understanding of personal property have been published, acknowledging the work of the Law Commission in this area in recommending a ‘third category’ of property to account for assets which may be capable of attracting property rights even if they do not fit into either of the two categories of personal property that have traditionally been recognised
- things in possession (generally, tangible things) and
- things in action (personal property that can only be claimed or enforced through a court action).
Digital assets have been much discussed in the context of estate planning; and while the bill doesn’t specifically make reference to crypto-currency, the guidance discusses the necessarily broad term ‘digital assets’; suggesting it
captures a huge variety of things including digital files, digital records, email accounts, domain names, in-game digital assets, digital carbon credits, crypto-tokens and non-fungible tokens (NFTs) digital assets.
Because these do not fit into the traditional understanding of personal property, the Law Commission recommended a new third category of property should be introduced to provide ‘statutory confirmation that a thing will not be deprived of legal status as an object of personal property rights merely by reason of the fact that it is neither a thing in possession nor a thing in action.’
Given the established test for personal property dates back to the 19th century case of Colonial Bank v Whinney, a time before any concept of digital or electronic assets was even considered, this new third category would ‘unlock’ the development of further common law by ‘removing the uncertainty stemming from Colonial Bank v Whinney’; essentially any legislation will not deal specifically with crypto assets, or any digital assets for that matter, it will create the legal framework for the development of a ‘highly nuanced and flexible approach which is not possible to achieve in statute.’
The Bill originated in the House of Lords having been introduced in September 2024 and has now had its first reading in the House of Commons; it has now been referred to a second reading committee. It may not return to the House for a second reading motion as debates on some Law Commission bills are held in the second reading committee; although if it faces opposition it remains possible.
