After the New Crypto Framework, UK Law Commission Recommends Distinct Crypto Category

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In the past few months, the United Kingdom government along with Wales has been looking into the possibilities of creating new legal frameworks that can accommodate cryptocurrencies. The UK is finally making changes to its outdated laws to legalize crypto which will make it legal tender. Of course, the road ahead is not without a few bumps. More specifically, the UK’s Law Commission is currently looking into the creation of a distinct category of personal property that can accommodate crypto and its unique features.

The body also made three recommendations for it and proposed key points to the British government. At the moment, there’s a common law analysis carried out to see how the legal framework in the UK and Wales would accommodate crypto, NFTs, and any other digital asset.

A New Category for Crypto Only

British law is finally open to the idea of cryptocurrencies, working on the legal framework to accommodate them. But, in order for that to happen, there should be a completely new category of personal property for digital assets. The Law Commission deliberately omitted certain boundaries for the proposed categories, saying that the British common law would determine which digital assets will be given the green light.

But, for a more ‘nuanced approach’ as representatives of the Commission stated, a new personal property category should be created. In that way, cryptos wouldn’t fall under any current property category, but rather in a new one that would define them properly. In that way, Bitcoin and the bunch would differentiate from other personal properties according to UK law, allowing legal practitioners, judges, and academics to provide non-binding advice to courts on many legal issues concerning crypto. Right now, the market’s not prepared to accommodate Bitcoin and the whole crypto sector, and changes are required.

At the same time, the Law Commission has also reiterated the desire for the government to create bespoke legal framework that would facilitate the transition into a new era. The final Law Commission recommendation refers to the eventual watchdog. It has recommended the UK’s FCA which would operate under the Financial Collateral Arrangements Regulations of 2003.

What Will the New Law Bring?

Things are moving at a blistering pace, with the law already being signed by important figures. It only needs to be signed by King Charles before cryptocurrencies are subject to similar regulations as traditional assets. Right now, the House of Lords is tidying things up before the law returns to the House of Commons to consider the changes.

After that, it’s up to King Charles to sign the law and for the changes to finally begin. While the country’s left the European Union, it’s still a major power in the world, and it’s great that it’s finally recognizing the benefits of legalizing cryptocurrencies.

In essence, the new regulatory framework will provide the much-needed legal clarity in the UK regarding crypto. If you ask us, many should follow it example, although it remains to be seen how the law will impact crypto businesses.

July 5, 2023: • No Comments

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