UK Officially Recognizes Crypto as Property with New Digital Assets Legislation

The United Kingdom has taken a significant step in the financial landscape by officially recognizing cryptocurrencies and stablecoins as property. This decision follows the approval of a new law by Parliament, giving crypto holders the same legal rights as traditional asset owners.

Key Takeaways:

The UK Parliament has enacted a law that classifies cryptocurrencies and stablecoins as legal property.
This legislation establishes that digital assets can be owned, inherited, and recovered.
Industry leaders believe this change enhances investor protection and supports the UK's ambition to become a center for digital finance.

This week, the Property (Digital Assets etc) Bill received royal assent, officially becoming law after its announcement in the House of Lords by John McFall. With King Charles's endorsement, digital assets will now benefit from property law protections, moving them out of a legal gray area primarily defined by past court decisions.

UK Formally Recognizes Crypto as Property with New Digital Assets Law

Industry Praises UK Crypto Property Legislation as a Major Advancement

The crypto industry has hailed this decision as a crucial and long-awaited milestone. Bitcoin Policy UK described the new law as “a massive step forward” for Bitcoin and other digital currencies. Meanwhile, the trade association CryptoUK noted that Parliament has formally codified principles that judges have previously applied in various cases.

Historically, common law typically treated digital tokens as property, but this was based on isolated rulings rather than a cohesive legal framework. The new law is a response to recommendations made by the Law Commission of England and Wales in 2024, which urged for crypto to be classified distinctly as personal property in order to clarify ownership disputes.

Under UK regulations, personal property is categorized into two groups: physical items, known as “things in possession,” and contractual rights, referred to as “things in action.” However, legal experts pointed out that cryptocurrencies did not easily fit into these classifications.

The new legislation addresses this issue by confirming that “a thing that is digital or electronic in nature” is considered personal property, even if it does not adhere to older definitions. This change simplifies how courts handle disputes involving stolen funds, inheritance, and corporate failures related to digital assets.

“This provides digital assets with a clearer legal status, particularly in terms of proving ownership or recovering tokens following fraud,” stated CryptoUK in their announcement.

The government perceives this legal framework as part of a larger initiative to establish Britain as a hub for digital finance. According to data from the financial regulator, approximately 12% of adults in the UK own some form of cryptocurrency, a figure that has been increasing consistently over the years.

UK Government Considers Restrictions on Crypto Donations

In related news, the UK government is contemplating a ban on cryptocurrency donations to political parties, which may have a direct impact on Reform UK—the first political party in the nation to accept digital assets.

This proposal is currently under examination as part of the forthcoming Elections Bill, according to sources familiar with the situation, although officials have not yet made any formal announcements regarding the plan.

The discussion follows Reform UK’s efforts to establish itself as the most crypto-friendly party under the leadership of Nigel Farage. Additionally, the UK government is moving closer to revising how decentralized finance activities are taxed, with support for a new framework that would prevent users from triggering capital gains taxes each time they deposit tokens into lending protocols or liquidity pools.