The Property (Digital Assets etc) Act 2025 - What it means for crypto assets

The Property (Digital Assets etc) Act has now received Royal Assent following its passage through the UK Parliament. The Act addresses ambiguity surrounding digital assets, such as cryptocurrencies and NFTs, and recognises that these digital assets may constitute a third category of personal property, thereby granting owners enforceable property rights and enabling them to seek legal redress and protection in cases of misuse and theft.

This firm previously discussed the issue of whether cryptocurrency can be considered property back in June 2024 (See: Crypto assets as personal property: neither a thing in action, nor a thing in possession : Clyde & Co). At the time, the Law Commission had proposed such legislation, but it had not yet been introduced into Parliament as a Bill.

The position under English law was previously that property was traditionally divided into two categories:

     1. a thing (or chose) in possession (being tangible, movable and visible); or

     2. a thing in action (being capable of being claimed or enforced through legal action or proceedings).

Cryptocurrencies and digital assets more generally do not neatly fall within either of the two categories of property. As such, a broad variety of causes of actions, remedies, and protections would have not been available, including enforceability of property rights against third parties. In order to address the legal gap, the English Courts had used the flexibility of the common law to develop a third category of personal property and to recognise that certain cryptocurrencies and NFTs were capable of being personal property under this third category. For example:

• AA v Persons Unknown [2019] EWHC 3556 (Comm) – The court held that Bitcoin was capable of being property, despite being intangible, decentralised, and not a chose in action or in possession.
• Osbourne v Persons Unknown [2022] EWHC 1021 (Comm) - The Court held that it was realistically arguable that NFTs should be treated as property for the purposes of the law, granting a freezing injunction to restraint the dissipation of the NFTs.
• Tulip v Bitcoin Association [2023] EWCA Civ 83 – While not the central theme of the case, the Court of Appeal did not challenge the idea that Bitcoin was a form of property.

Having said that, the Law Commission recognised in its 2023 report on digital assets that whilst in common law there was an existing position recognising digital assets as a third category of personal property, targeted statutory reform was required in order to confirm and support the evolving position. The new Act delivers on that recommendation, providing a clearer legal foundation for the treatment of digital assets as property under English law.

On 2 December 2025, the Property (Digital Assets etc) Act received Royal Assent. The key provision of the Act See (Property (Digital Assets etc) Act 2025) provides as follows:

"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.”

This provision confirms that digital or electronic assets can be recognised as a third category of personal property, distinct from the traditional two classifications. However, it does not confirm that any particular type of asset is definitely the object of personal property rights, as the Act is intended to “[unlock] the development of the common law by removing the uncertainty stemming from Colonial Bank v Whinney [in which it was held all personal things are either in possession or action], without unduly restricting the way in which it can then respond to technological developments and new types of assets”, as explained in Parliament’s Explanatory Notes.

Therefore, it will be up to the English Courts to continue shaping the law in respect of existing digital assets, such as cryptocurrencies and NFTs, as well as any new emerging digital asset types. In order to qualify as personal property, the relevant digital asset will have to fulfil the criteria of property: (i) definable; (ii) identifiable by third parties; (iii) capable in their nature of assumption by third parties; and (iv) have some degree of permanence.

Whilst this provides the Courts with flexibility to respond to new and rapid developments in the technological landscape, it leaves uncertainty as to the treatment of particular types of digital assets where there is currently little or no jurisprudence and, as such, the remedies available. Thus, the primary concern will be crypto tokens, at least initially, given the level of pre-existing case law. That said, the UK is among the first jurisdictions to formally recognise digital assets in law, ensuring that UK law can effectively handle and protect ownership of these assets. The Act represents a significant step forward as it enhances legal recourse for digital assets (subject to fulfilling the criteria of property) in several pivotal ways:

• legal remedies for theft and fraud, enabling owners to take action when digital assets are unlawfully taken;
• dispute resolution tools, such as freezing injunctions, which can be applied to digital assets in cases of interference or conflict;
• inclusion in bankruptcy and insolvency as well as estate proceedings, allowing digital assets to be treated as part of the asset pool available to creditors or heirs; and
• construction of complex legal relationship, allowing for characterisation as custody relationships, collateral arrangements or (constructive) trust.

Therefore, whilst the Act does not provide all the answers, it is certainly a welcome starting point. As technology markets continue to grow, this Act will enable innovation and development while preserving legal certainty. This flexible approach will be key to maintaining UK’s role in both the digital economy and the jurisdiction for digital disputes.