UK Formally Recognizes Crypto as Property with New Digital Assets Law - A Watershed Moment for Finance

London just rewired the financial system's core code. The UK's new Digital Assets Act doesn't just tinker at the edges—it grants crypto the legal status of property, a tectonic shift for a $2 trillion asset class.

From Digital Ghost to Legal Entity

For years, crypto existed in a legal gray zone—valuable but intangible, traded but not fully owned. The new law cuts through that ambiguity. Bitcoin, Ethereum, and their digital kin now have the same foundational legal recognition as a house or a stock certificate. This isn't just regulatory tidiness; it's the bedrock for everything from inheritance and bankruptcy proceedings to collateralized loans.

The Ripple Effect for Traders & Builders

Expect immediate clarity for institutions sitting on the sidelines. Custody solutions become legally defensible. Smart contract disputes now have a formal framework. For the everyday holder, it means your keys truly represent undisputed ownership—a concept traditional finance took centuries to solidify, achieved here in a line of legal code. It bypasses the need for convoluted, case-by-case court rulings that have left the sector in limbo.

A Cynical Nod to The Old Guard

Let's be honest—the City's traditional asset managers, who've spent decades perfecting the art of fee extraction from opaque structures, just watched a more transparent competitor get its birth certificate. The irony is delicious.

The UK's move sets a global precedent, forcing other jurisdictions to play catch-up. It provides the legal certainty needed for the next wave of institutional capital and complex financial products. The message is clear: digital assets aren't a speculative sideshow anymore. They're property, and the market's foundation just got poured in concrete.

Industry Hails UK Crypto Property Law as ‘Massive Step Forward’

Industry groups welcomed the decision as a long-awaited breakthrough.

Bitcoin Policy UK called the law “a massive step forward” for Bitcoin and other digital assets, while trade body CryptoUK said Parliament has now written into statute what judges had already been applying through individual cases.

Until now, common law had often treated digital tokens as property, but only through scattered judgments.

The new law follows advice issued in 2024 by the Law Commission of England and Wales, which urged lawmakers to classify crypto as a distinct FORM of personal property to avoid uncertainty around ownership disputes.

Under UK law, personal property traditionally falls into two categories: physical objects, known as “things in possession,” and contractual rights, referred to as “things in action.”

The problem, legal experts noted, was that crypto did not easily fit into either group.

BREAKING: UK JUST OFFICIALLY RECOGNIZED #BITCOIN AND CRYPTO AS PROPERTY UNDER LAW

NATION STATE GAME THEORY PLAYING OUTpic.twitter.com/6wfAoFL5CJ

The new legislation resolves that ambiguity by confirming that “a thing that is digital or electronic in nature” can still be treated as personal property, even if it does not meet older definitions.

CryptoUK said this change makes it easier for courts to settle disagreements involving stolen funds, inheritance cases or company failures involving digital holdings.

“This gives digital assets a much clearer legal footing, especially for proving ownership or recovering tokens after fraud,” the group said in a statement.

The government also views the change as part of a broader effort to make Britain a hub for digital finance.

Data from the financial regulator shows around 12% of UK adults hold some form of cryptocurrency, a figure that has risen steadily in recent years.

UK Weighs Ban on Crypto Donations

As reported, the UK government is considering a ban on cryptocurrency donations to political parties, a move that could directly affect Reform UK, which recently became the first party in the country to accept digital assets.

The proposal is under review as part of the upcoming Elections Bill, according to people familiar with internal discussions, though officials have yet to formally confirm the plan.

The debate follows Reform UK’s push to present itself as Britain’s most crypto-friendly party under the leadership of Nigel Farage.

Furthermore, the UK government has moved a step closer to overhauling how decentralized finance activity is taxed, backing a new framework that WOULD spare users from triggering capital gains each time they deposit tokens into lending protocols or liquidity pools.