Law Commission Proposes Groundbreaking Rules for Ownership of Crypto Tokens and NFTs • TechCrunch
Legal reform body for England and Wales says digital assets are personal property
There is a middle finger earthquake occurring in the field of digital assets, which is expected to create shock waves that will impact technology not only in the real world but also in the metaverse.
These potentially game-changing changes appear in an innocuous-looking, albeit lengthy, consultation paper entitled “Digital Assets: Consultation paper”, published by the Law Commission of England and Wales, the UK’s public law reform body. United.
This paper proposes that digital assets be recognized as a new form of personal property, potentially creating an “internet of property”, which could have huge implications for the UK’s position as a tech hub distributed ledgers (DLT) and fintech.
Why are property rights important?
Property rights are essential to the creation and deployment of capital. A proper legal basis for ownership of digital assets will have a host of real-world ramifications, such as enabling the creation of security over digital assets – meaning they can be used as collateral for loans – offering people or businesses greater protection against fraud and allow digital assets to be distributed like other property in the event of insolvency.
The Law Commission’s consultation paper considered the many opposing views and came down decisively on one option: to treat digital assets as a new form of ownership.
For example, if someone takes your NFT, you might want to take legal action to get it back, seek to stop the taker from transferring it to another account, report it to the police for theft, or take legal action against someone who helped him. None of this is possible without clear recognition of digital assets as property. If your NFT is then transferred to an innocent buyer, should they keep it? There is no answer to this without knowing what type of property is a digital asset.
The entire decentralized finance (DeFi) industry, which includes cryptocurrencies such as bitcoin, is based on transferring crypto assets to other accounts where they can then be deployed in accordance with contracts. intelligent or other sets of rules.
Are these movements considered a kind of legal transfer of the asset or a collateral agreement or a form of safekeeping? These questions may seem unimportant when everything is going well, but as soon as something goes wrong, participants will suddenly care a lot. They will determine who gets the remaining assets and if anyone else – cryptocurrency exchanges, developers, etc. – could be responsible for the losses. And again, there is no clear answer to any of this until the nature of digital assets as personal property is established.