Crypto matters: (a) what is a thing? (b) EU MiCA rules

Draft Digital Assets Bill

On 22 February 2024, the UK's Law Commission (a statutory independent body that keeps the laws of England and Wales under review and recommends reforms as appropriate) published a consultation paper on a draft Bill (Property (Digital Assets etc) Bill) that confirms that digital assets are capable of being recognised by the law as property.    

A new ‘third’ category

The consultation follows the Commission's Final Report on digital assets, published on 28 June 2023, which concluded that a ‘third category things’ was required for digital assets that are capable of being things to which personal property rights can relate, despite the fact it is challenging to apply the existing categories of property to them (those categories being ‘things in possession’ and ‘things in action’).  

The relevant clause in the Bill reads:

'Objects of personal property rights 

A thing (including a thing that is digital or electronic in nature) is capable of being the object of personal property rights even though it is neither— (a) a thing in possession, nor (b) a thing in action.'

More questions than answers?

The Commission acknowledges that there are questions that will need to be resolved by common law. These include what things does this third category cover, what personal property rights attach to things in the third category, and what are the consequences (eg liability in tort and appropriate remedies).

One other thing

The Commission invites comments from stakeholders on the whether the Bill implements the recommendations of the Final Report and would like to hear feedback on possible costs, benefits and any unintended consequences. Comments and feedback are required by 22 March 2024.

While stakeholder responses will help to shape the final version of the Bill, it will ultimately be for government to decide how to take this thing forward.

EU Regulation on markets in cryptoassets (MiCA)

Over in Brussels, on the same day, the EU Commission adopted a series of Delegated Regulations that supplement MiCA. The measures will now be scrutinised by the Council of the EU and European Parliament. Assuming there are no objections, they will then be published in the Official Journal of the EU. 

The Delegated Regulations are:

Commission Delegated Regulation specifying the fees charged by the EBA to issuers of significant asset-referenced tokens (ARTs) and issuers of significant e-money tokens.

Commission Delegated Regulation specifying the procedural rules for the exercise of the power to impose fines or periodic penalty payments by the EBA on issuers of significant ARTs and issuers of significant EMTs.

Commission Delegated Regulation specifying certain criteria for classifying ARTs and EMTs as significant.

Commission Delegated Regulation specifying the criteria and factors to be taken into account by ESMA, the EBA and competent authorities in relation to their intervention powers.