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Today we will discuss the UK Law Commission paper released last week regarding how the UK should regulate blockchain-based digital assets. This is one of the most progressive and complete analyses of the industry by Professor Sarah Green. She has combined a unique knowledge of the law and blockchain to put forth actionable proposals that may become the basis of laws used by the US, EU, Canada and the rest of the world.
Onwards and upwards,
Liam
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Background
There have been numerous proposals for regulating blockchain technology and assets over the past few years. Still, they have either been too passive and allowed the industry to run free without oversight or been too overbearing, stifling innovation and pushing companies out of that jurisdiction.
Last week the Law Commission of England and Wales gave a consultation paper to the British Government, which is truly revolutionary in its approach.
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The Law
The critical aspects of the proposal include:
- Creating a new class of personal property (instead of trying to classify this as a security, commodity, chattel, fixture, etc.). This new category would be called data objects, and laws regulating data objects would be specific to the unique features of digital assets.
- Rewriting the laws around ownership and control of digital assets to better leverage the ability of the blockchain to track the "true" owner.
- Clarifying the law around transactions involving digital assets, including both digital objects and other non-blockchain-based digital assets.
In short, this is the first serious proposal by a central world government that recognized that the current law doesn't work for blockchain assets, and new laws may be required. If this became the standard approach, it would significantly boost the industry, providing clarity and legitimizing it as equivalent to longstanding asset classes.
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Takeaways
Incredibly, this proposal was made in 2022. This technology has only existed in its current form for 14 years. While for those in the tech space, that is an eternity, in law, that's no time. To this day, the US still doesn't have privacy and data protection laws, and those are issues stemming from the 1960s. The law does not move this fast; the recognition that the law should be rewritten to accommodate this new industry is a clear sign that many in positions of power see the blockchain as fundamental to the future of society.
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This newsletter (or any other content provided by Law4Startups) is not legal, financial, or tax advice. We are simply providing legal information and collating news from around the world. We recommend that you consult an attorney before making any legal decisions. We do not make any representations and take no responsibility for your actions based on this information.
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