On 2 December 2025, the Property (Digital Assets etc) Act 2025 (the Act)¹ received Royal Assent and came into force. The Act follows the recommendations of the Law Commission in its Final Report on Digital Assets² in June 2023 and short supplemental report and draft Bill in July 2024³ that confirmed that certain digital assets can be regarded as personal property under English law.

The Act is very short and clarifies that a thing is not prevented from being the object of personal property rights merely because it does not fall into either of the traditional categories of personal property under English law, namely a thing in possession or a thing in action.  This is because digital assets are fundamentally different to more traditional physical assets and do not fit easily within these more traditional categories. 

The Law Commission therefore recommended that legislation should confirm the existence of a “third” category of personal property into which digital assets such as crypto-assets could potentially fall, removing any lingering uncertainty. In its Final Report the Law Commission concluded that the common law of England and Wales is sufficiently flexible to accommodate digital assets and noted that the courts of England and Wales had already recognized that digital assets are capable of being things which may attract personal property rights on a case-by-case basis.  The Act therefore leaves it to the courts to develop this “third” category of personal property by defining its boundaries and the rights that attach to it.  

The UK government also accepted the Law Commission recommendation to establish a technical expert group to provide guidance on technical and legal issues relating to the control of digital assets. The Ministry of Justice has asked the UK Jurisdiction Taskforce (UKJT) to take forward this work which should ideally address the application of common English law forms of security to these assets, which remains a key point for the market moving forward.  In addition, the Law Commission recommended certain statutory amendments to the Financial Collateral Arrangements (No. 2) Regulations 2003 (the FCARs) to provide clarity in relation to the application of the FCARs to digital assets. The Law Commission also recommended setting up a multi-disciplinary project to formulate a statutory framework for the entering into, operation and enforcement of certain crypto asset collateral arrangements. It is understood that HM Treasury is still reviewing these recommendations.

This Act is a welcome development, which will enable technical expert groups and the courts to develop this emerging area of law on an incremental basis, and reinforces the UK's position as a leading jurisdiction for digital assets. It will be interesting to see how the English common law develops and applies existing legal principles in ways that accommodate the particular features of digital assets, thereby ensuring legal certainty.

This note is for guidance only and should not be relied on as legal advice in relation to a particular transaction or situation. Please contact your usual contact at Hogan Lovells if you require assistance or advice in connection with any of the above.

Authored by Bryony Widdup and Isobel Wright.