The recent Law Commission report by England and Wales addressing crypto ownership rights have been applauded by politicians and the legal sector. Nonetheless, this document, while providing some legal clarity, is not the final word on peripheral issues such as developer liability.
The key issue here is the perception that cryptographic code embedded in digital asset transactions functions as a legal safeguard. However, in reality, victims of crypto frauds, hacks, and bankruptcy often resort to courts for redressal. Hence, the new legislative proposals put forward by the Law Commission could potentially afford victims additional legal remedies.
The Commission’s report has pacified some litigants, who perceive it as a turning point in their favor in a lawsuit against Bitcoin developers, filed by Craig Wright – the infamous crypto scientist. He claims to be the real author of the Bitcoin white paper, originally credited to the pseudonymous Satoshi Nakamoto.
Lawyers, however, caution that this proposal does not encompass other legal ambiguities apart from token ownership. Therefore, they contend that more work needs to be done to enhance legal certainty and to nurture the U.K. as a crypto hub.
Despite strong political support for the Commission’s proposals, these legal reforms must be considered within the broader context of the Government’s ambition of making the U.K. a global hub for cryptocurrency and digital assets. This goal was first expressed by Prime Minister Rishi Sunak.
Prior to government deliberation, the clarity proffered by the Law Commission brings added certainty to sector participants. The Commission’s report signifies the arrival of a legal framework that’s as concrete as any statutory law. Etay Katz, Head of Digital Assets at Ashurst law firm, implied this report could set the stage for further developments.
The Commission recommended that treatment of cryptocurrencies should largely fall within the purview of common law, instead of expecting lawmakers to anticipate every possible scenario through legislation. Common law, which is determined case by case, offers a flexible approach that allows judicial responses to unanticipated circumstances.
However, the legal status of digital assets is far from settled. The Commission has merely set the legal apparatus on a particular trajectory, and the ultimate outcome will require time. For instance, the Commission’s report could influence Craig Wright’s lawsuit against Bitcoin Core developers, who he claims have an obligation to manipulate the code to recover his alleged lost Bitcoins. Nonetheless, the Commission has clarified that their conclusions do not directly impact developers’ alleged fiduciary duties.
Ultimately, the Commission’s report is merely a prelude to the greater necessity of legislative action. Further clarity on issues like the legal definition of digital assets as well as the responsibilities of crypto custodians is still pending. Despite these necessary steps, it is the timely implementation of such legislation and regulations that would eventually position the U.K as a leader in the crypto sector.
Source: Coindesk
