When Digital Assets Become Property: An Analysis Of The Property (Digital Assets) Act 2025

UKSLSS
Jun 10
9 min read

Writers: Isha Ursekar and Rebecca Kwek

Editors: Amy Marsh and Sijia Cai

[2025/26 Editorial Committee]

Introduction

The UK’s Property (Digital Assets etc) Act 2025 (“Act”) marks a significant shift in modernising the legal framework for digital assets by recognising them as legal property. Prior to this, the law recognised only two categories of property, but digital assets fell neatly in neither category. To compensate for this legislative gap, courts utilised the common law to determine if digital assets constitute property.^[1]

The Act is largely confirmatory rather than transformative, because the common law had already begun recognising digital assets as property. While the Act performs important clarificatory and signalling functions, this essay argues that its practical contribution to the development of digital property law remains limited. In particular, the Act fails to address the remedial uncertainties that determine whether proprietary rights in digital assets can be effectively enforced.

Arguments for the Act

Strength 1: Conceptual clarification

One significant argument in favour of the Act is that it provides legal certainty by confirming that digital assets are capable of constituting property, thereby removing conceptual ambiguity in the law.

Before the Act, the law generally recognised two categories of property^[2]:

Things in possession, which refers to physical objects that can be touched and held, such as gold or a house; and
Things in action, which refers to an intangible right that can only be “claimed or enforced through legal action” against another person, such as contractual rights and debts.

Strictly speaking, digital assets do not fit neatly into either category. Since they cannot be physically possessed as physical items can, digital assets are not things in possession. Similarly, since they generally do not represent a claim against any identifiable person, digital assets do not “embody any right capable of being enforced by action”^[3] and cannot be considered things in action. However, with the introduction of the Act, this ambiguity has been clarified, section 1 of the Act stating that:

“A thing (including a thing that is digital or electronic in nature) is not prevented from being the object of personal property rights merely because it is neither—

(a) a thing in possession, nor

(b) a thing in action^[4]”

Despite not falling within the two traditional categories of property, the provision asserts that digital assets are not precluded from being treated as property, recognising a separate category that is neither a thing in action nor a thing in possession. This removed conceptual uncertainty as to whether digital assets possess enforceable property rights, and also lowers the cost of proceedings by removing the debate over whether something can be "property" at all, which in turn enables courts to address substantive disputes directly.

Strength 2: Preservation of adaptability

A further strength of the Act lies in its deliberately open-ended formulation, which allows courts to adapt legal principles to new forms of digital assets as technology evolves.

If the Act had prescribed a fixed list of digital assets considered property, it would not have been able to accommodate rapid technological development. Tens of thousands of digital assets have been created over the last two decades and will continue to do so.^[5] Consequently, a fixed list of digital assets qualifying as property may quickly become outdated, and any future developments are unlikely to be easily accommodated by rigidly defined legislation. Hence, through the open-ended provision, the legislation allows judges to exercise their judgment to determine on a case-by-case basis how particular assets should be treated. The indeterminate boundaries of the third category could be a strength, affording courts the flexibility necessary to adapt rules to the novel and evolving characteristics of digital assets.

Strength 3: Stronger legal protections

Recognising digital assets as property enhances the legal protection by enabling claimants to rely on proprietary remedies such as tracing, recovery, and injunctive relief.^[6] These remedies allow claimants to assert rights in the asset itself rather, which is particularly important where assets are unique, hard to value or where the defendant is insolvent. For instance, in Osbourne v Persons Unknown^[7] the Court held that it was realistically arguable that Non-Fungible Tokens (NFTs) constituted property and granted a freezing injunction to restrain their dissipation.^[8] As the NFTs were treated as property, the court was able to intervene to preserve the assets pending resolution of the dispute. By confirming that digital assets are capable of attracting proprietary status, the Act therefore reduces uncertainty surrounding the availability of such remedies and strengthens the practical protection afforded to digital asset holders.

Strength 4: Symbolic and economic value

Beyond doctrinal clarification, the Act also performs an important signalling function by demonstrating the UK’s commitment to supporting innovation and investment in digital asset markets. By establishing a clearer framework, the Act reassures potential investors and lowers barriers for companies that are considering accepting digital assets as payment, or offering crypto-related services.^[9] In doing so, it helps position the UK as an attractive jurisdiction for digital innovation.

Weaknesses of the Act:

However, while contributing to legal certainty in the classification of digital assets, the Act remains arguably too minimalistic in other respects and does not provide sufficient guidance for the development of the law.

The Act confirms that digital assets are capable of constituting property, but it does not specify the legal incidents of that property. Questions concerning transfer, control, priority, and remedies remain governed by existing doctrine. Prior to the Act, despite digital assets not falling into either category of property, in AA v Persons Unknown^[10] (“AA”), the court recognised that certain cryptocurrencies and Non-Fungible Tokens (NFTs) could constitute property. Building on previous decisions, Bryan J in AA held that “it is fallacious to proceed on the basis that the English law of property recognises no forms of property other than choses in possession and choses in action.”^[11] While this was a decision from a lower court, subsequent cases did not challenge this view^[12] suggesting that the common law had already moved towards recognising certain digital assets as property even without statute. In its analysis on whether a digital asset could be property outside of the recognised categories, the common law established a framework for determining whether something is property. This “indicia” of property was first fleshed out in National Provincial Bank v Ainsworth^[13] as:

being definable
identifiable by third parties,
capable in their nature of assumption by third parties,
having some degree of permanence.

Using these indicia, the common law has based its criteria on whether a “thing” could be property, as seen in the judgment of AA. This means that digital assets can fall within the scope of personal property if they meet the indicia of property, despite the lack of legislation on this matter.

However, although this indicates that the common law has developed a workable test for classification, the Act does not adopt or formalise this framework. Instead, it merely confirms that digital assets are capable of constituting property without providing criteria for determining when that status is met. As a result, recognition alone does not amount to a complete legal framework. Questions of classification therefore remain governed by incremental judicial development, with the Act largely affirming rather than structuring the existing common law approach.

Although this approach preserves flexibility, its delegation of the substantive development of digital property law to judicial evolution would be unproblematic if the courts were able to resolve the remaining doctrinal issues independently. However, recent authority suggests otherwise. In Ping Fai Yuen v Fun Yung Li & Anor,^[14] the court held that extending the tort of conversion to digital assets would most likely require statutory reform rather than incremental development of the common law as it was bound by the previous decision in OBG Ltd v Allen.^[15] Ping highlights the hurdles still faced by digital assets; while the Act provides the status of property to digital assets, the remedies to protect that property are still evolving and legislative action is necessary to address the practical enforcement of digital property rights. The Act’s failure to spell out remedies for the misappropriation of digital assets, therefore supports the argument that the Act clarifies classification but does not provide meaningful guidance on this point and is arguably too minimalistic.

In addition, the adaptability of the Act entails a corresponding trade-off in terms of legal certainty in this aspect. While the Act signals institutional support for digital asset markets, legal certainty in commercial practice depends not merely on recognition of property status but on the predictability of enforcement mechanisms. Unresolved doctrinal limitations, as discussed above in relation to Ping, continue to create practical risks for asset holders; the ambiguity makes the law less predictable, and legal proceedings may be costly debating over these issues. The central issue is therefore not whether digital assets can be recognised as property, but whether the law provides effective mechanisms to protect and enforce that property, which the Act falls short of providing.

Comparison to Singapore

A comparison with Singapore suggests that similar developments can occur through the ordinary evolution of the common law, casting doubt on the effectiveness of the Act in its clarifactory function. Singapore has not enacted legislation expressly recognising digital assets as property. Instead, the legal status of digital assets has developed gradually through piecemeal decisions and regulatory guidance, particularly against the background of cryptocurrencies.

In 2017, the Monetary Authority of Singapore (“MAS”) released the following statement:

“Digital tokens may represent ownership or a security interest over an issuer's assets or property. Such tokens may therefore be considered an offer of shares or units in a collective investment scheme under the SFA. Digital tokens may also represent a debt owed by an issuer and be considered a debenture under the SFA.”^[16]

The focus has shifted from the technological characteristics of a digital token onto the legal rights it represents, such as ownership or debt interests capable of regulation. In doing so, it acknowledges that digital tokens can function as legally significant economic assets, establishing a conceptual basis upon which courts may later recognise proprietary interests and remedies in digital assets.

In the recent case, CLM v CLN [2022], the court was required to determine whether cryptocurrencies were capable of attracting proprietary rights and whether a proprietary injunction could be granted. The High Court, citing the House of Lords’ seminal decision in Ainsworth, held that cryptocurrencies could give rise to proprietary rights. While in similar cases, such as ByBit Fintech Ltd v Ho Kai Xin [2023], cryptocurrency assets were held to be ‘things in action’, suggesting that they have incorporeal property rights. Therefore, from the MAS’s regulatory position to these decisions, it appears that proprietary protection/regulation for digital assets is emerging incrementally, indicating a potential willingness to accept digital assets as property.

Additionally, procedural rules have also expressed this development of digital assets as property. Under the Rules of Court 2021, Order 2022, r.1 states the following: “movable property” includes cash, debt, deposits of money, bonds, shares or other securities, membership in clubs or societies, and cryptocurrency or other digital currency^[17]. While this provision mainly serves a procedural purpose, its inclusion of cryptocurrency within a recognised category of ‘moveable property’ represents a growing acceptance of digital assets within the legal framework. However, this raises two questions: whether other types of digital assets, beyond digital currencies, would fall within the definition of moveable property, and whether moveable property is equivalent to property, which may raise issues in future disputes.

Taken together, Singapore’s approach signals a ‘common law pathway’ to recognition, in which the proprietary status of digital assets emerges gradually through regulatory interpretation and judicial reasoning rather than through codified legislation. This approach suggests that legislative confirmation may not be wholly necessary for courts to recognise proprietary interests in digital assets. The incremental development from case law, alongside regulatory guidance, indicates that the existing legal frameworks can adapt to digital assets without the need for explicit statutory confirmation. Consequently, the enactment of the Act may be understood less as a transformative reform and more as a confirmation of the legal position that courts are already moving towards, while still leaving more complex issues—particualrly those relating to remedies—to be resolved prospectively.

Conclusion

In conclusion, while the Property (Digital Assets etc) Act 2025 removes the conceptual barrier in English law recognising digital assets’ status as property, its practical effect may be limited. As Courts had already begun extending proprietary status to digital assets, the Act confirms an existing legal position rather than transforming the law in this area. However, as the Act was enacted only recently, its practical impact on future case law remains somewhat nebulous.

References

^[1] AA v Persons Unknown [2019] EWHC 3556 (Comm)

^[2] Colonial Bank v Whinney [1885] 30 Ch D 261, [285]

^[3] n1, [55]

^[4] The Property (Digital Assets etc) Act 2025, s1

^[5] Amy Park, Reza van Roosmalen, 'Digital Assets' (Deloitte 2025) <https://dart.deloitte.com/USDART/home/publications/deloitte/on-the-radar/digital-assets> accessed 13 March 2026

^[6] Matthew Gold, Anne Rose, ‘The Property (Digital Assets etc) Act 2025: Digital asset ownership’

<https://www.mishcon.com/news/the-property-digital-assets-etc-act-2025-digital-asset-ownership> accessed 13 February 2026

^[7] [2023] EWHC 39 (KB)

^[8] Ibid, [23]

^[9] Gold and Rose (n6)

^[10] AA (n1)