A UK Government-backed, industry-led initiative has published an expert legal statement recognising cryptoassets as property and smart contracts as enforceable agreements under English law. The statement is published by the UK Jurisdiction Taskforce (UKJT), a taskforce of the UK's Lawtech Delivery Panel.
The report concludes that:
- Cryptoassets are, in principle, to be treated as property under English law. They are not disqualified from being property by their distinctive features (intangibility, cryptographic authentication, use of a distributed transaction ledger, decentralisation, rule by consensus), nor by the fact that they are "pure information".
- A smart contract (characterised by its "automaticity") is capable of having contractual force, although whether the requirements for an enforceable contract are met in a given case will depend on the parties' words and conduct.
Uncertainty over the legal status of cryptoassets and smart contracts is often blamed for hindering their adoption. The statement has been developed by leading barristers in consultation with technical, legal, judicial and academic experts, and therefore provides some comfort that cryptoassets and smart contracts have a solid foundation in English law. However, the statement has no binding legal force and so, although it provides the "best possible answer", is unlikely to be the final word.
The UK is the first jurisdiction to produce an authoritative statement on these issues. At the launch event of the report, the speakers highlighted several next steps for the UK:
- Regulation of dealing in cryptoassets, and remedies. Now that the legal status of cryptoassets and smart contracts has been confirmed, the stage is set for regulators to consider what specific regulation is necessary, and for the courts to consider what remedies are appropriate in disputes.
- Legislative confirmation of legal status. Although the report concludes that the legal status of cryptoassets and smart contracts is clear under English common law, the next step is for the UK Law Commission to consider whether legislation in this area is necessary.