After years of academic work, Law Commission consultations, and scattered High Court decisions attempting to adapt old categories to modern assets, the British Parliament has finally said that digital and electronic assets can exist as their own form of personal property, not because they are integrated into something else, but because they function as objects in their own right, writes CryptoSlate.
This creates a third category of personal property in English law, one that stands alongside “things in possession” (physical goods) and “things in action” (claims that you enforce in court).
Cryptocurrencies were never fully standardized because tokens are not physical objects and are also not contractual IOUs, reports the Telegraph.
For years, lawyers and judges improvised, extending doctrines built for ships, bearer bonds, and warehouse receipts to handle assets locked by private keys.
However, the system now has a statutory anchor. The law states that a digital object is not disqualified from being property simply because it fails the tests of the other two categories.
This matters because English law still has an extraordinary global reach. A large proportion of corporate contracts, fund structures and custody agreements rely on English law even when the businesses themselves are based in Switzerland, Singapore or the US. When London clarifies ownership rights, the ripples go far and wide.
And with the Bank of England conducting a direct consultation on systemic stablecoins, the timing almost guarantees that this Act will become the foundation for the next decade of cryptocurrency market design in the UK.
Before that, cryptocurrencies existed in a kind of doctrinal limbo. Courts consistently treated tokens as property in practical settings, issuing freezing orders, granting possession orders, and appointing administrators. However, they did so by treating cryptocurrency as if it belonged to one of the inherited categories.
It worked in a way, but it was inelegant and had many hidden limitations. If an asset doesn’t fit clearly into a category, you run into problems when you try to pledge it as collateral, assign it in a bankruptcy, or dispute title after a foreclosure.
The new act doesn’t give cryptocurrencies special rights, nor does it create a customized regulatory regime. It simply tells courts that cryptocurrencies and other digital assets can sit in a bucket that was always missing.
How English law treated cryptocurrencies before and where the nodes began to split
The UK has been slowly moving towards this moment through case law for much of the past five years. The turning point was the Law Commission’s decision to treat cryptocurrencies as “data objects,” a concept intended to capture assets that exist through consensus rather than physicality or contractual promise.
Judges began to refer to the idea, applying it haphazardly, but the lack of statutory recognition made each new decision feel provisional.
Anyone tracking down stolen Bitcoin or recovering hacked stablecoins had to rely on the court’s willingness to stretch the old rules again.
This was particularly messy in lending and custodianship. A lender wants clarity that a borrower can give them a property interest in collateral and that the interest will survive bankruptcy.
With cryptocurrencies, courts could only speculate on how this should work, drawing on the analogy of intangible elections in action.
Bankruptcy practitioners faced similar gaps. If a stock market crashed, where exactly did a client’s “ownership” interest lie? Was it a contractual right? A fiduciary claim? Something else entirely?
The uncertainty made it more difficult to determine who owned the ring-fenced assets and who simply had unsecured claims in a long line.
The same tension emerged in disputes over control. Who “owns” a token: the person holding the private key, the person who paid for it, or the person with contractual rights through an exchange? Common law offered a path to answers, but never a definitive one.
And every time a new hybrid asset emerged (NFT, wrapped token, cross-chain claims), the edges of the old categories seemed to crumble even further.
The new act doesn’t resolve every philosophical debate, but it clears up most of the procedural hurdles. By recognizing an independent class of digital property, Parliament makes it easier for courts to apply the right solution to the right problem. Ownership becomes less about forcing analogies and more about interpreting the asset as it exists on-chain. /Telegraph/