In July 2022, the Law Commission of England and Wales published a set of proposals aimed at protecting purchasers of digital assets like nonfungible tokens and cryptocurrencies. Citing the rapid growth in ownership and trading of NFTs and cryptocurrencies, the commission worked with legal experts, technologists and crypto users to develop a set of recommendations that includes the creation of a new, unique category of personal property for digital assets and clarifications to existing laws around ownership, control and transfer of digital assets. The goal, the commission says, is to “deliver wider recognition and legal protections for digital assets, allowing a more diverse range of people, groups and companies to interact online and benefit from them.”
Most crypto leaders agree that the industry needs more regulatory oversight to grow, and many view this move by the U.K. as a step in the right direction. However, it’s wise for participants in the crypto community to educate themselves not only on the new proposals but also on being responsible crypto owners, because it may be some time before digital assets enjoy full de facto legal protection. Here, eight members of Cointelegraph Innovation Circle share important things the crypto community needs to keep in mind, even as the U.K. starts to turn attention toward better protecting consumers’ crypto assets.
It’s essential to understand the complexity of custody
Not every crypto user understands the complexity of custody and the various ways in which crypto can be stored. Is your crypto in a MetaMask? Or a cold wallet? Is it still protected if you have it on an exchange but don’t have the private keys? It’s important to get this right and cover all your bases. – Motti Peer, Reblonde LTD
Companies may face added risk
With the U.K. proposing to extend property laws to protect crypto users’ rights, individual and institutional investors should keep in mind what this could mean for ownership of NFTs, currencies and tokens. While individuals may have more protections, what will companies do to shield themselves from taking on added risk? – Budd White, Tacen
If not carefully considered, new regulations could hamper innovation and growth
To support innovation in this increasingly tech-driven world, we must develop the right legal foundations for emerging technologies rather than rushing blindly into structures without considering their potential effects on future innovation. We must be very thoughtful about how we create a legal framework for these technologies, because it could discourage or stifle development and adoption. – Carmelia Ray, Kindly
DeFi integration won’t be achieved until the value of cryptocurrencies is codified
By granting digital assets the status of “property,” the U.K. would extend Roman law to the crypto ecosystem. While traded assets and NFTs are included in the scope, crypto used only as a form of payment is not. Achieving true DeFi integration requires codifying the value of cryptocurrencies as a distinct asset class with the freedom of mobility necessary to meet Web3 and real-world environments. – Oleksandr Lutskevych, CEX.IO
Proposed regulations could help draw more newcomers to crypto
Protecting consumers is key to the development and growth of the crypto space. This new development could assist people who are affected by scams, hacks and theft. As crypto continues to enter the mainstream, I’m a proponent of making newcomers and veterans alike feel safe in this nascent space. – Ty Smith, Coinbound
Law enforcement agencies and legal professionals aren’t fully up to speed with crypto yet
It’s great to have laws in place, but until the police, lawyers and prosecutors get up to speed with the issues, the laws are pretty much toothless. I have been scammed out of my NFTs, and when I went to the police to report it, I couldn’t even find the page to report such a crime and ended up giving up! So keep this in mind: In crypto, do your own research, and protect yourself. – Rupert Barksfield, Amulet
The crypto community must keep up with new and proposed laws to effectively protect themselves
These proposals will hopefully provide a strong legal foundation for the digital assets industry and reinforce the U.K.’s position as the global crypto hub. Still, the crypto community should be mindful of the legal terms and conditions introduced to cover crypto under property rules. Being educated will make it easier for crypto investors to leverage legal action to reclaim losses they’ve sustained in hacks or scams. – Vinita Rathi, Systango
At the moment, there’s almost no way to recoup lost crypto assets
This is the truth of the crypto world: There is still almost no way of getting back lost assets. It’s always important to handle your assets with care and preferably use a hardware wallet to store your assets to keep them safe. – Tim Haldorsson, Lunar Strategy
This article was published through Cointelegraph Innovation Circle, a vetted organization of senior executives and experts in the blockchain technology industry who are building the future through the power of connections, collaboration and thought leadership. Opinions expressed do not necessarily reflect those of Cointelegraph.
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