UK Property (Digital Assets) Act 2025 Guide

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Reader Role	Relevant Sections
Legal & Compliance	Click to view sections A Very Short Act With Very Long Consequences - Colonial Bank v Whinney, doctrinal reform How the Act Actually Operates - Ainsworth criteria, property tests Unresolved Questions - Private international law, collateral frameworks
Custody & Asset Servicing	Click to view sections Why Recognition as Property Matters - Proprietary remedies, trust arrangements Who Gains from This Reform - Custodians, insolvency segregation Practical Implications - Custody, collateral, inheritance
Treasury & Finance	Click to view sections Practical Implications - Collateral arrangements, Basel SCO60 What the Act Does Not Address - Collateral regime gaps What Professionals Should Do Now - Operational adjustments
Wealth & Estate Planning	Click to view sections Who Gains from This Reform - Digital asset holders, 12% UK adult ownership Practical Implications - Inheritance and estate planning
Policy & Regulatory Analysis	Click to view sections How We Arrived Here - Law Commission process, case law development Comparison with Other Jurisdictions - Common law vs civil law, MiCA Global Outlook - Jurisdictional competition, bifurcated landscape
Litigation & Disputes	Click to view sections Why Recognition as Property Matters - Tracing, freezing injunctions, constructive trusts Practical Implications - Theft and fraud recovery, FATF guidance Who Does Not Benefit - Fraudsters face stronger remedies

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The United Kingdom has taken a decisive step that other jurisdictions have hesitated over for nearly a decade. With a deliberately modest Act containing two sections and no ornament, the UK has confirmed that digital assets such as BitcoinThe first decentralized cryptocurrency, created in 2009 by Satoshi Nakamoto, stablecoins, and NFTs can attract personal property rights. This very short Act has much more in it than you would think at first glance. It affects theft recovery, collateral structures, custody segregation, insolvency, and even inheritance. And it positions English law directly alongside Singapore, Dubai, and Switzerland as a governing framework for digital asset business.

If you work in custody, compliance, wealth management, treasury, or litigation, this change is not academic. It is already part of your operating environment.

A Very Short Act With Very Long Consequences

It is rare that a reform of this scale arrives in such a compact form.

The Property (Digital Assets etc) Act 2025 contains exactly two sections. Only one of them carries substantive legal effect, and even that effect is expressed in a single, careful sentence.

Section 1 states that a thing, including digital or electronic things, is not prevented from being the subject of personal property rights simply because it is neither:

1. a thing in possession, nor
2. a thing in action.

This sounds straightforward. It is not.

It removes a doctrinal barrier that has stood, largely unchallenged, since Colonial Bank v Whinney (1885), where the court declared that all personal property must fall into one of those two categories.

Digital assets do not fit either category. They are intangible, yet they do not represent a claim against any person. They exist independently of legal recognition, and this independence made them difficult to classify.

For several years, courts attempted to work around the problem, issuing judgments that recognised BitcoinThe first decentralized cryptocurrency, created in 2009 by Satoshi Nakamoto and NFTs as property on a case-by-case basis. These decisions were sensible, but they sat awkwardly against an outdated conceptual framework. The Act brings coherence to what was previously held together by judicial improvisation.

The Act is short on purpose. They removed the blockage and left the rest to the courts, which is, historically, England's comparative advantage.

Why Recognition as Property Matters

Property status is not a symbolic gesture. It is the key that unlocks the machinery of private law.

Once something is recognised as property, the full range of proprietary remedies becomes available:

• tracing and recovery of misappropriated assets,
• freezing injunctions against identifiable tokens,
• constructive trust arguments,
• segregation of client assetsCrypto or fiat funds belonging to customers entrusted to a CASP or custodian in insolvency,
• use of digital assets as collateral,
• inclusion of digital assets in succession planning.

Without property status, courts are forced to work from first principles in every case, which is inefficient and uncertain. With property status, legal processes that apply to tangible and intangible assets alike can be extended to digital ones.

“

"Calling something 'property' isn't symbolic. It determines what tools the courts can actually use."

The UK basically acknowledged the obvious: these assets already behave like property, so the law should treat them that way. Digital assets circulate, are transferred, are stolen, are pledged, and are inherited. The law now treats them accordingly.

Who Gains from This Reform

Digital asset holders

Roughly 12% of adults in the UK holdA misspelling of 'hold,' used to mean holding onto cryptocurrency for long-term gains some form of cryptocurrency. For them, the Act provides a clear basis for asserting proprietary rights in cases of theft or fraud. Instead of attempting to recover value indirectly, claimants may now pursue specific assets, which often yields better outcomes.

Custodians and financial institutions

Custody arrangements for digital assets have always sat in a grey zone. The Act clarifies that digital assets can be held on trust for clients. This has immediate consequences for insolvency: client assetsCrypto or fiat funds belonging to customers entrusted to a CASP or custodian held on trust remain segregated from the estate of a failing custodian.

For banks and institutional counterparties, the Act provides a foundation to structure collateral arrangements involving digital assets. While a broader collateral framework may follow, this is the essential first step. The UNIDROIT Principles on Digital Assets and Private Law, particularly Principles 10 and 19, provide international standards for custody and insolvency segregation that the UK Act now enables domestically.

Advisors and professional service providers

Compliance officers, wealth managers, estate practitioners, insolvency professionals, and litigators all benefit from a stable legal footing. For years, they have had to design processes around the uncertainty of classification. That uncertainty has now been reduced.

Who Does Not Benefit

Fraudsters and those involved in laundering digital assets

The UK courts now have a simpler and clearer basis on which to issue proprietary injunctions, freezing orders, and tracing orders. Digital assets, with their unique identifiers and ledgerA record of financial transactions histories, are well suited to this. The Act strengthens the hand of both victims and investigators.

Recent FATF asset recovery guidance even suggests that, with the right analytics, virtual assetsFATF term for digital value representation tradable or transferable electronically can be easier to trace and seize than traditional assets. Stronger property status translates into practical recovery results.

Civil law jurisdictions that cannot accommodate digital assets in property law

Germany's Civil Code requires property to relate to physical objects. Japan faces similar issues. These systems can regulate digital assets, but they cannot easily reclassify them as property without significant doctrinal reform.

Civil law systems are stuck with rules that don't bend, so they move slowly. Common law can adjust case by case, so it can move faster.

Institutions in jurisdictions with legal uncertainty

Businesses that have built their operations where digital assets are not clearly recognised as property may find themselves at a competitive disadvantage. Clients will naturally prefer jurisdictions where their assets receive the strongest legal protection.

How We Arrived Here

The Law Commission began reviewing digital assets in 2020. The process was extensive: multiple consultation papers, expert submissions, and technical analyses. The recommendations came out in mid-2023 and the draft Bill landed a year later. The Act then passed with cross-party support.

However, courts had already been preparing the ground:

• AAMaking crypto wallets programmable and more user-friendly through smart contracts v Persons Unknown (2019) recognised BitcoinThe first decentralized cryptocurrency, created in 2009 by Satoshi Nakamoto as property suitable for a freezing injunction.
• Osbourne v Persons Unknown treated NFTs as property, enabling proprietary remedies.
• Tulip Trading v BitcoinThe first decentralized cryptocurrency, created in 2009 by Satoshi Nakamoto Association proceeded without questioning Bitcoin's property status.

The Act simply puts into writing what judges had already been forced to do in practice.

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"In fact, the Act will now be an interesting field of interpretation for the common law. The courts will fill it with decisions on classes, asset types, and rights, and Parliament left the rest open to case-by-case interpretation on purpose."

This is the central point. Parliament has provided the outline; the courts will draw the detail.

How the Act Actually Operates

Importantly, the Act does not create new types of property rights. It merely confirms that digital assets are eligible to be treated as property. The courts will continue to apply existing property tests from National Provincial Bank v Ainsworth, which require an asset to be:

• definable,
• identifiable by third parties,
• capable of being transferred or assumed by others,
• sufficiently stable or permanent.

Digital assets meet these criteria.

Every tokenA digital asset built on an existing blockchain, often representing utility or value has a unique identifier. Public ledgers provide transparency. Transfers are inherent to the technology. Distributed networks ensure persistence.

The Law Commission also highlighted additional characteristics relevant to this new category of property:

• independent existence (digital assets exist regardless of contractual relationships or legal recognition),
• rivalrousness (control by one party excludes control by another).

These characteristics distinguish digital assets both from traditional intangible rights and from infinitely replicable digital files.

Practical Implications Across Sectors

Theft and fraud recovery

With property status confirmed, courts can issue orders that focus on specific assets rather than on damages alone. This is particularly valuable when digital assets can be traced across wallets. Recent FATF asset recovery guidance even suggests that, with the right analytics, virtual assetsFATF term for digital value representation tradable or transferable electronically can be easier to trace and seize than traditional assets. Stronger property status is not theoretical; it can translate into very practical recovery results.

Custody

Custodians can now holdA misspelling of 'hold,' used to mean holding onto cryptocurrency for long-term gains digital assets on trust. This aligns legal structures with industry practice and significantly improves outcomes in the event of insolvency. The UNIDROIT Principles on custody (Principle 10) and insolvency (Principle 19) now have domestic legal foundation in the UK.

Collateral arrangements

Banks and treasury teams can begin structuring security interests in digital assets with a reasonable expectation of enforceability. The Act sets the foundation for further development, although a dedicated collateral regime would still be beneficial. The Basel Framework SCO60 paragraphs on cryptoasset exposures define how banks must treat such arrangements for capital adequacy purposes.

Inheritance and estate planning

Digital assets can now be integrated into succession planning without conceptual difficulty. Executors and beneficiaries have clearer rights and procedures.

Insolvency

The distinction between client assetsCrypto or fiat funds belonging to customers entrusted to a CASP or custodian and assets forming part of an insolvent estate becomes clearer. This is essential for customer protection and for institutional risk management.

What the Act Does Not Address

The Act is intentionally limited. It does not:

• define which digital assets qualify as property,
• regulate exchanges or service providers,
• provide a tax framework,
• prescribe specific property consequences,
• extend to Scotland,
• resolve jurisdictional conflicts,
• establish the collateral regime recommended by the Law Commission,
• create a unified UK approach (Scotland is developing its own legislation).

It provides the legal foundation, nothing more. The remaining work belongs to courts and future statutes.

Comparison with Other Jurisdictions

Common law jurisdictions

Common law systems have proven more adaptable than civil law systems.

Dubai (DIFC) The Digital Assets Law (2024) recognises digital assets as a third category of property. The DIFC Court of Appeal in Huobi v Tabarak reaffirmed BitcoinThe first decentralized cryptocurrency, created in 2009 by Satoshi Nakamoto's property status.

New Zealand In the 2020 Cryptopia liquidation, the High Court held that cryptocurrencies are property capable of being held on trust.

Singapore Courts continue to develop jurisprudence around digital assets, including proprietary claims.

Australia, India, BVI All are moving in the same direction. The BVI courts explicitly align with English decisions.

Civil law jurisdictions

Germany and Japan struggle with the requirement of tangibility as a precondition for property. Workarounds exist, but they do not solve the doctrinal issue. This is a structural, not merely technical, problem.

The EU and MiCA

MiCAAn EU regulatory framework standardizing crypto rules for issuers and service providers regulates the conduct of service providers but does not establish a harmonised property regime. It does not address how digital assets should function as collateral. France had to introduce separate legislation in 2025 to fill that gap.

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"The contrast with the UK is clear: the UK has addressed private law foundations first, leaving regulatory detail for separate treatment."

Unresolved Questions and Remaining Barriers

Private international law

There is no consensus on where a digital asset is "located."

Jurisdiction, governing law, enforcement, and security interests all depend on this. Courts in Singapore and elsewhere have begun to propose approaches, but even now, the picture remains unclear.

Collateral frameworks

The Law Commission recommended a bespoke regime for digital asset collateral. Until it arrives, institutions must rely on adapted structures that were designed for securities, not decentralised assets. UNCITRAL work on secured transactionsA transfer of value or data recorded on a blockchain, verified by network participants, and permanently added to the distributed ledger addresses this need but implementation varies by jurisdiction.

Expert guidance

An advisory panel for non-binding guidance has been proposed but not yet implemented.

Legacy integration

Financial institutions must now adjust documentation, custody procedures, and compliance frameworks to reflect the Act. For many, this will require significant internal work.

Divergence within the UK

Scotland is pursuing its own legislative path. This may create inconsistencies within the UK's internal market.

Global Outlook

You can already see where this is heading.

Common law jurisdictions are advancing and defining digital asset property rights through courts and targeted legislation. Civil law jurisdictions face structural constraints that will take time to resolve.

We're heading toward two legal regimes: places where digital assets are treated as actual property, and places still stuck on old theory:

• jurisdictions where digital assets are recognised as property and can support sophisticated commercial arrangements, and
• jurisdictions where regulatory compliance exists, but property law remains out of step with technological reality.

And this gap will shape where money, people, and businesses end up.

Three Possible Futures

1. English law becomes the default standard

If market participants prefer predictable property treatment, and they usually do, English governing law may become the standard for digital asset transactionsA transfer of value or data recorded on a blockchain, verified by network participants, and permanently added to the distributed ledger, custody, and collateral, much as it dominates cross-border finance.

2. Parallel frameworks emerge

Common law jurisdictions handle property. Civil law jurisdictions handle regulation. Businesses navigate both worlds simultaneously, adding complexity but enabling global operations.

3. Regulatory and legal arbitrage intensifies

Jurisdictions that combine strong regulatory regimes with clear private law foundations will attract disproportionate business.

London, Singapore, Dubai, and Zurich are positioning themselves accordingly.

What Professionals Should Do Now

The Act is not conceptual. It requires immediate operational adjustments.

Custodians should review trust structures, insolvency protections, and client documentation.

Compliance officers will see increased requests for freezing and tracing assistance.

Treasury teams should revisit collateral frameworks and consider whether documentation requires amendment.

Wealth advisors must integrate digital assets into estate planning systematically.

Litigators will find proprietary remedies more accessible and more effective.

This is not a theoretical development. It alters the legal foundations on which digital asset activity rests.

Conclusion

The UK has chosen a pragmatic path. Rather than redefining property law in detail, it has removed the outdated constraints and allowed common law to adapt. This approach plays to the system's strengths: gradual refinement, judicial interpretation, and flexibility.

It also sends a clear message.

If you want a legal system that treats digital assets seriously and predictably, London now gives you that.

Other jurisdictions will catch up, in time.

But the UK has moved first in a way that matters: at the level of legal infrastructure, not headlines.