Introduction
The crypto industry continue to gain ground, acceptance and adoption globally. Crypto used to be viewed by some authorities as scam and fraud, but now views are rapidly changing. The UK has taken a bold and big step to give crypto and other digital assets the legal protection they deserve, changing how these property are now viewed.
The new classification that digital assets now have under UK law ensures that crypto owners can rest assured that their assets are safe and can be protected by law. This would have profound effect on how people treat these assets. With legal protection, more people would feel safe to build value and portfolio in crypto. Before we go deep into how this would be would affect the economy, lets see the legal recognition first.
Crypto as personal property - the bill
The new bill which has been introduced as legislation in the UK recognizes crypto as personal property. In essence, it means that UK citizens that hold or own any digital assets would have them viewed in law as personal property. As such, they would enjoy all the legal protection that other personal property like land and house enjoys. Here is how the Bill was announced in the UK gov official website
The Property (Digital Assets etc) Bill, introduced in Parliament today, will mean that for the first time in British history, digital holdings including cryptocurrency, non-fungible tokens such as digital art, and carbon credits can be considered as personal property under the law. source
Once this announcement was made in the official X account of the UK Justice ministry, many in the crypto space reacted to it. While some see it as a great thing for the crypto space, others saw it as another attempt by the authorities to censor crypto. However it is, this looks like a double-edge sword. Lets look at the side of the story that sounds like a win which the UK government wants citizens to buy into.
Economic growth with legal protection
Before now, crypo has no special legal classification in UK law. As such, it does not have the legal protection that other tangible objects like house enjoys. It was thus a huge letdown as people in that country may not want to have a huge digital assets portfolio especially when it comes to doing business or investment with them. The lack of legal protection means that when crypto scams happen, there is no way to hold perpetrators accountable.
Besides protecting owners of digital assets against scam, the new bill will attract huge funds from crypto into the law sector as more people would seek legal protection for their digital assets and investments. In addition to that, more citizens would be at ease to invest in crypto projects and businesses, knowing that there is legal protection for their investments. In cases where there is disagreements between parties in marriage, business or other partnerships, the law would be a common tool to settle such discrepancies.
Basically with property protection law available for crypto and digital assets, more people that have been reluctant would be more open to invest in crypto. In this way, the new bill will help to grow the UK economy as more people get involved in crypto. Of course, this is the side of the story the UK government wants people to buy into. However, there is another side to it that crypto users where quick to point it. That would also be a source of concern.
Taxes and Censorship
While declaring crypto as personal property might look like a win for all, it may not appear to be that way. As personal property that will enjoy property laws protection, crypto would also inherit some problems with that classification. One of the areas to look into is tax.
As a property, the government will then have a legal basis to tax digital assets including your crypto holdings. Already, governments around the world are trying to raise taxes and having a new object to tax would be a welcome development for them. The government will then keep an eye on your crypto wallets and holdings. They will expect people to declare their digital property and pay the taxes that come along with that. While discussions about taxes are not part of the bill, it remains to be seen if and when the government will act in that regard. But popular sentiments are that the government will start taxing crypto sooner or later.
Another aspect of it how governments would handle legal disputes regarding digital assets. The law will give them a legal basis to confiscate crypto and other digital assets. They could legally force a crypto business to close down if they feel they are not operating the way it should. They might seize or withhold digital assets pending the results of litigation. The government will simply have more central power to tamper with the digital assets of anyone in that country, destroying all the principles of decentralization that crypto is known for.
Finally
Governments around the world are clearly trying to have some influence in the crypto space. Some are clearly against it, while a few others have embraced it. The UK government with this new bill is positioning itself as a pro-crypto institution. It remains to be seen if this new law will let crypto owners enjoy additional legal protection while retaining their full ownership rights or not.
Note: Thumbnail is mine
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