Crypto assets should be treated as tradable property under the English law, a panel consisting of top judges and lawyers has stated. The panel, headed by Chancellor of the High Court Sir Geoffrey Vos, gives cryptos the same legal status as physical property, a huge stride for the industry in the country.
In its comprehensive 46-page document, the U.K. Jurisdiction Taskforce of the Lawtech Deliver Panel stated that “crypto assets have all the indicia of property.” The panel identified the principle novel and characteristic features of crypto assets as intangibility, cryptographic authentication, use of a distributed transaction ledger, decentralization and rule by consensus.
The report also recognized smart contracts, saying that they function in the same way as the normal contracts and are thus enforceable by the English and Welsh law. It stated:
A smart contract is capable of satisfying those requirements just as well as a more traditional or natural language contract, and a smart contract is therefore capable of having contractual force. Whether the requirements are in fact met in any given case will depend on the parties’ words and conduct, just as it does with any other contract.
In instances when the parties to a contract have to sign some documents, smart contracts can be used as an alternative, the report indicated. “In principle, a statutory ‘signature’ requirement can be met by using a private key which is intended to authenticate a document, and a statutory ‘in writing’ requirement can be met in the case of a smart contract whose code element is recorded in source code.”
The report comes after over six months of research, deliberation and participation from the public as well as private entities. The extensive research and public participation was to ensure that the panel came up with the most comprehensive conclusion they could, Vos stated. The panel “promoted several rounds of public and private consultation so as to ensure that the drafting team were considering the right legal questions, and had the benefit of the most respected expert, technical, legal, judicial and academic opinion,” he remarked.
The recognition of cryptos as tradable property is a massive step for the industry. By being defined s property, cryptos can now be owned legally in the U.K. and their ownership can be legally transferred. The panel recognized both on-and off-chain transfer of cryptos, although it warned about the risks that come with off-chain transfer.
Vos has advocated for the correct definition of cryptos in the U.K., most recently during a lecture at the University of Liverpool where he stated, “It is a matter of how they are regulated. As I have already said, a clear distinction needs to be drawn between the concept of crypto assets as property, on the one hand, and how they are to be regulated, on the other hand.”
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