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Cryptoassets: UK Jurisdiction Taskforce Publishes Statement

On November 11, the UK Jurisdiction Taskforce (UKJT) published a statement with two key findings on the legal status of cryptoassets and smart contracts under English law (the Statement). The UKJT is a taskforce of the LawTech Delivery Panel of the Law Society, which is the representative body for solicitors in England and Wales. The Statement was made following a public consultation, which closed in June 2019.

In the Statement, the UKJT considered the features which distinguish cryptoassets from conventional assets (using the term “cryptoassets” generally rather than formulating a precise definition). Following this analysis, they concluded that cryptoassets are “property” under English law — but they are not “things in possession”. Some of the implications of this are that cryptoassets:

  • are not “goods” for the purposes of the Sale of Goods Act 1979;

  • cannot be the object of a bailment (since bailment requires the transfer of possession); and

  • cannot be the object of a pledge or lien because these types of security also require the transfer of possession.

This finding will also have implications for succession on death, bankruptcy and insolvency, fraud, theft or breach of trust, for example.

In term of smart contracts, the UKJT also did not define these precisely but instead identified the key features: terms recorded in a “computer-readable form”, which are performed “automatically and without the need for, and in some cases without the possibility of, human intervention.”

The UKJT found that smart contracts can be valid under English law and may be enforced by the courts; however, the UKJT does not believe that a smart contract would necessarily satisfy a requirement that a contract be “in writing”.

The purpose of the Statement is to provide legal certainty and improve market confidence. The Statement may be persuasive, but it is not legally binding. It remains to be seen whether these findings would be followed by the court.

The Statement is available here.

©2023 Katten Muchin Rosenman LLPNational Law Review, Volume IX, Number 326

About this Author

John Ahern, Financial Attorney, London, Katten Law Firm

John Ahern, partner at Katten Muchin Rosenman UK LLP and head of the London Financial Services group, focuses his practice on banking, financial services, UK and European financial markets, and related regulations. His background in private practice and as in-house counsel at a global investment bank provides him with perspective on the unique regulatory issues facing the wholesale and private banking sectors. John advises multilateral trading facilities, broker-dealers and banks on trading, clearing and settlement as well as custody of securities—both physical and...

+44 (0) 20 7770 5253
Carolyn H. Jackson, International Attorney, Katten Muchin law firm

Carolyn Jackson is a partner in Katten Muchin Rosenman UK LLP and is a Registered Foreign Lawyer. She provides US financial regulatory legal advice to a broad range of market participants, including commercial banks, investment banks, investment managers, broker-dealers, electronic trading platforms, clearinghouses, trade associations and over-the-counter derivatives service providers.

Carolyn guides clients in the structuring and offering of complex securities, commodities and derivatives transactions and in complying with US securities and commodities laws...

+44 0 20 7776 7625
Nathaniel Lalone, Katten Muchin Law Firm, Financial Institutions Attorney
Senior Associate

Nathaniel Lalone, a partner at Katten Muchin Rosenman UK LLP, has a broad range of experience in the regulation of financial products and financial markets, and frequently provides regulatory and compliance advice to trading venues, clearing houses and buy-side firms active in the over-the-counter (OTC) derivatives, futures and securities markets. He is actively involved in advising clients on the implementation of MiFID 2 and MiFIR in the European Union as well as the international reach of US financial services regulation. He also has significant experience with structuring...

+44 0 20 7776 7629
Neil Robson, private equity fund managers counselor, Katten Law Firm, London

Neil Robson, a regulatory and compliance partner with Katten Muchin Rosenman LLP, focuses his practice on counseling hedge and private equity fund managers and other investment advisers on operational, regulatory and compliance issues. He regularly addresses Financial Conduct Authority (FCA) and EU authorization and compliance under both the EU Alternative Investment Fund Managers Directive (AIFM Directive) and MiFID, cross-border issues in the financial services sector, market abuse, anti-money laundering and regulatory capital requirements, formations and buyouts of...