In The Times, Jane Colston and Jessica Lee Examine the Law Commission’s Digital Assets Reform Proposal

In an article for The Times, Partner Jane Colston and Associate Jessica Lee examined the U.K. Law Commission’s proposed reforms of digital assets “that will have an impact across the crypto-marketplace, ranging from exchanges and platforms to token issuers, market participants and investors.”

The Nov. 3 article, entitled “Crypto fraud will remain a grey area despite consultation,” noted that the key proposal for reform is the establishment of a third category of property of “data objects,” which would include crypto-tokens.

“The consultation also considers other questions plaguing the digital assets, including how to determine ownership and control of a crypto-asset, the legal effect of transfers and how custody arrangements of crypto-tokens should operate.,” they wrote. “The last is a particularly germane issue in the wake of recent liquidity and insolvency issues surrounding several platforms and exchanges.”

Despite addressing these issues, the authors argued there were still two notable omissions from the commission’s consultation that would be considered by the Law Commission next year, but merit urgent attention to promote certainty and stability in the crypto industry.

The first is jurisdiction and governing law, they commented. “Crypto-fraud remains a significant issue in this market and victims of fraud seeking recovery of stolen crypto-assets will need to determine where to bring a claim and what law applies to any claim.”

The other is decentralized autonomous organizations, which are organisations on the blockchain with no central leadership whose governance and activities are instead automated through smart contracts and voted on by members.

“These autonomous organisations commonly feature in blockchain projects from decentralised finance offerings to investment funds and even community and charitable causes,” they wrote. “However, their legal status is ambiguous, which gives rise to further issues, including who is liable for their activities and do existing regulations apply to an autonomous organization.”

Read the full article here.