We have written before about the Law Commission's project on digital assets, which, among other things, led to the Electronic Trade Documents Act last year. The Law Commission continues its project and has recently published two further updates.  The first relates to a call for evidence on digital assets and electronic trade documents, and the second is a consultation on draft legislation following its report in June 2023.

Call for evidence

The Law Commission's call for evidence aims to gain a better understanding of the most challenging and prevalent issues that digitisation, the internet, and distributed ledger technologies pose for private international law.

When parties to a private law dispute are based in different countries, or the facts and issues giving rise to the dispute cross national borders, questions of private international law arise: in which country’s courts should the parties litigate their dispute, and which country’s law should be applied to resolve it?

The project has a particular focus on crypto-tokens and electronic trade documents. The Law Commission says this is because these assets are prevalent in market practice, whilst also posing novel theoretical challenges to the traditional methods of private international law. The deadline for responses is 16 May 2024.

Digital assets and personal property rights

In addition, the Law Commission is consulting on draft legislation to confirm the existence of a third category of personal property into which crypto-tokens and other assets could fall.

Its report in June concluded that certain digital assets, including crypto-tokens and non-fungible tokens (NFTs) are capable of attracting personal property rights. However, because digital assets differ significantly from physical assets, and from rights-based assets like debts and financial securities, they do not fit within traditional categories of personal property. The Law Commission recommended that legislation should confirm the existence of a “third” category of personal property.

The Law Commission has now prepared draft legislation to reflect this recommendation and are seeking views on the draft clauses as to their potential impact. The consultation ends on 22 March 2024.

English law is flexible enough to cover original and new types of asset, including cryptocurrency and NFTs. However, the Law Commission continues to carry out work in this area with a view to increasing legal certainty and encouraging English law to be the first choice for blockchain technology.