The UK Law Commission is proposing to create a new digital property category to bring cryptocurrencies and non-fungible tokens (NFTs) under UK law.
Cryptos would join personal property categories “things in possession,” like gold, and “things in action,” such as shares.
UK Law Commission Claims Approach Will “Reassure Industry”
Former chancellor and now Prime Minister Rishi Sunak asked the Commission to assess if current laws could accommodate crypto. Last year, Sunak vowed to make the UK a crypto hub. In its new proposal, the Commission also recommends government hire crypto experts to advise courts.
Adam Sanitt, a Norton Fulbright professor and contributor, said that the Commission chose a surgical rather than an agricultural approach which many in the industry will find “reassuring.” He added that, if implemented, the new rules would give crypto asset holders legal protection and drive the UK’s ambitions to become a crypto hub.
The Commission also recommends the UK government draft new laws for crypto collateral arrangements.
Regardless of the proposal’s feel-good factor, the UK government faces imminent challenges battling the ongoing cost-of-living crisis. Rishi Sunak has supported the Bank of England’s interest rate hikes. However, government grants have seen some citizens able to do little more than service debt.
On top of that, the UK’s House of Commons Committee unflatteringly recommended placing crypto investing in the same legal category as bingo halls, lotteries, and casinos.
Crypto Firms Eye London and Asia Expansions
Still, the industry could get a much-needed reputational boost from capital investment setting up shop in London.
Andreessen Horowitz, one of the largest venture capital firms in the US, said on June 12 it would open a London branch focusing on Web3 investments. Last month, Gemini co-founders Cameron and Tyler Winklevoss mulled opening a second base in London.
Read here how US regulators are pushing crypto firms overseas.
Hostile US regulatory responses have prompted Gemini and other firms to also focus on Asian expansion. Coinbase CEO Brian Armstrong said at a London fintech event that a stalemate with regulators could see the company expand elsewhere. The exchange partnered with Standard Chartered to offer crypto trading in Singapore.
In April, BoE governor Andrew Bailey said that UK crypto legislation could be finalized in the next 12 months. In the interim, the Financial Conduct Authority oversees the industry.
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