A Third Category: UK Law Recognises Digital Assets as Property
Red double decker bus passing palace of Westminster London during daytime
On 2nd December 2025 the Property (Digital Assets etc) Act 2025 received Royal Assent, formally confirming that qualifying digital assets can be objects of personal property rights under UK law.
The Act removes uncertainty by stating that 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 thing in possession nor a thing in action,” effectively creating a statutory “third category” of property.
Industry groups and advocates welcomed the change. Bitcoin Policy UK called it a landmark that gives legal protection to holders, while Crypto UK highlighted clearer routes for recovery after theft, inclusion in insolvency and estate processes, and stronger foundations for tokenisation and innovation.
Parliament’s passage of the Act follows Law Commission recommendations and aims to replace inconsistent case‑by‑case rulings with a consistent statutory framework that courts can develop over time.
The Act’s practical effects include improved legal certainty for ownership, recovery, and transfer of crypto‑tokens and NFTs, and clearer treatment in bankruptcy and probate.
Administrators, custodians and platforms will now operate with a firmer legal basis, which could encourage institutional participation and product development in the UK’s digital asset market. However, the Act leaves detailed boundaries and rights to judicial development, meaning litigation and regulatory guidance will still shape how the new category functions in practice.
Key considerations and next steps
Confirm asset classification: Not every digital item will automatically qualify; courts will delineate the scope.
Custody and contracts: Firms should review custody models and contractual terms to align with property treatment.
Estate and insolvency planning: Individuals and advisors should update wills and recovery plans to reflect property status.
Risks and limitations
Statutory recognition does not eliminate all uncertainty: judicial interpretation, cross‑border enforcement, and regulatory regimes (e.g., financial regulation) will continue to affect outcomes. Stakeholders should monitor case law and regulatory guidance as the new framework is tested in disputes.
This article is for informational and educational purposes only and is not financial advice.