The United Kingdom’s digital asset sector was dealing with a rollercoaster of emotions on Tuesday, as it received the good news that a bill had been signed into law allowing digital assets to be treated as property, alongside the less welcome revelation that the government is considering a ban on digital currency donations to political parties.
Digital assets as property
The U.K. parliament has passed a much-anticipated bill into law that creates a new category of personal property for digital assets and non-fungible tokens (NFTs), described by advocates as “a hugely significant step” for crypto-users in the country.
On December 3, Lord Speaker John McFall informed the House of Lords that the Property (Digital Assets, etc.) Bill had received royal assent from King Charles, marking the final stage in the legislation’s passage into law in the U.K.
Before the passage of the bill, the Law of England and Wales recognized two categories of personal property, ‘things in possession’ (i.e., tangible property) and ‘things in action’ (i.e., intangible property such as debts or rights).
This puts digital assets in somewhat of a grey area, as they can possess both qualities or neither, resulting in confusion and hindering dispute resolution in court proceedings. At least, this was the conclusion of the U.K. Law Commission—”a statutory independent body that keeps the law of England and Wales under review and recommends reform”—who, in August 2024, proposed introducing a “third category” that would clarify that:
“A thing (including a thing that is digital or electronic in nature) is not prevented from being the object of personal property rights merely because it is neither— (a) a thing in possession, nor (b) a thing in action.”
In September 2024, the U.K. government took up the recommendation and published the Property (Digital Assets, etc) Bill to introduce a third category of “thing” that would “allow for certain digital assets to attract personal property rights.”
After spending just over a year navigating the U.K. legislative process, the bill finally passed through both Houses of Parliament this week and was sent to the King for his royal stamp of approval.
Naturally, this significant development in U.K. property law was met with a welcome response from supporters of the digital asset industry.
Freddie New, policy chief at crypto-advocacy group Bitcoin Policy UK, said on X on December 2 that the bill becoming law was “a massive step forward for Bitcoin in the United Kingdom and for everyone who holds and uses it here.”
Meanwhile, advocacy group CryptoUK, also responding to the announcement, called the bill “an important step forward in recognising the role of digital assets in the modern economy,” one that “marks a meaningful shift towards giving everyday holders the same confidence and certainty they expect with other forms of property.”
It added that “this change provides greater clarity and protection for consumers and investors by ensuring that digital assets can be clearly owned, recovered in cases of theft or fraud, and included within insolvency and estate processes.”
Despite the rave reviews from crypto advocates, the bill does not specify that all digital assets are now considered property in England and Wales; it simply creates a legal framework under which digital assets can be “personal property.” Whether a particular digital asset qualifies as property remains a matter for the courts under common law, which involves decisions made by judges in court cases.
In other words, the bill removes the legal uncertainty or “grey area” that many digital assets have found themselves in, providing legal certainty that they can, in principle, be considered property. It is now up to judges to decide on a case-by-case basis whether a given digital asset meets the legal tests for property.
Another Tuesday event that may cause U.K. digital asset advocates to temper their celebrations was the revelation that the government is considering a ban on digital currency donations to political parties.
Back to the top ↑
Donation ban
On Tuesday, it was revealed that the U.K. Government is considering a ban on digital asset donations to political parties, in a move aimed at cutting off a potentially lucrative avenue of funding for the emergent Reform UK party and its leader, Nigel Farage, who has made support for digital assets a part of their still largely undefined platform.
According to a December 2 report from Politico, Keir Starmer’s Labour Government is discussing banning donations as a part of an upcoming “Elections Bill,” announced by the Ministry of Housing, Communities and Local Government in July.
Despite not being part of the original policy paper outlined by the government in July—focused as it was on lowering the voting age to 16 and modernizing voting systems—officials are reportedly now considering adding measures to outlaw the use of digital assets to fund U.K. politicians.
Citing “three people familiar with recent discussions on the bill,” the Politico report suggested the move was inspired by a surge in the public opinion polls for Farage’s right-wing populist Reform UK Party, from 2% in 2022 to leading the polls at 29% this September.
Reform UK became the first party to accept digital asset donations earlier this year. Farage has since revealed, in an October interview with Reuters, that his party had already received “a couple” of donations in the form of crypto assets. Reform has also established its own digital currency donations portal and promised “enhanced” controls to prevent any misuse.
When asked by Reuters if he was seeking to replicate the campaign strategy of his longtime friend, United States President Donald Trump, by appealing to digital asset supporters, Farage suggested his advocacy for the industry predated that of Trump, saying, “I was way before Trump… I came out publicly with this in 2020, and he came out for it much, much, later.”
Farage has also admitted he holds some long-term digital assets and told a digital asset conference in London that he was the “only hope” for the industry in Britain.
For its part, the government reportedly did not deny that the digital asset donation ban move was under consideration, saying it would “set out further details in our Elections Bill.”
In addition to increasing the voting age to 16, the bill is expected to impose new requirements on political parties and their donors, as well as clamp down on donations from shell companies and unincorporated associations.
Based on the Politico report, those urging action against digital currency donations include former Cabinet Office Minister Pat McFadden, Business Committee Chair Liam Byrne, and Phil Brickell, who leads an all-party group on anti-corruption and fair tax.
Back to the top ↑
Watch: Breaking down solutions to blockchain regulation hurdles
Source: https://coingeek.com/uk-passes-property-bill-recognizing-digital-assets/
