August EWJ 24 - Flipbook - Page 59
Assets as Personal Property: Short Consultation on
Draft Clauses in February 2024. The consultation
paper recognises that most investors assume that when
they buy crypto assets, they acquire property rights in
these assets, however, this is not necessarily the case as
the law currently stands. Furthermore, although the
common law has answered some questions in relation
to some types of digital assets, it notes that this is vulnerable to future changes in judicial approaches. The
consultation paper included a draft Bill which is
drafted with a view to confirming that things “including
a thing that is digital or electronic in nature” (being an undefined category which extends beyond crypto tokens
to a range of other assets, including, for example, voluntary carbon credits) are capable of being recognised
by the law as having personal property rights, even
though they are not things in possession or things in
action. The deadline for responses to the draft Bill was
22 March 2024. We await the response to the draft Bill
and further developments.
based in particular on sections of the legal statement
on Crypto assets and Smart contracts (the “Legal
Statement”) published by the UKJT in November
2019 (i.e. only a short while before the judge's
decision that was given in December 2019).
The Legal Statement considered the general legal
principles which applied to novel aspects of crypto assets, including whether crypto assets fit within the
scope of things which could be considered to be property in law. It noted that Colonial Bank should not be
treated as limiting the scope of the types of things
which are property. Indeed, that case was not about
the definition of property in general but about
whether shares which had been deposited as security
for a loan were “things in action” within the meaning
of a specific bankruptcy statute. The Legal Statement
highlighted that in several cases the courts had not
found any difficulty in treating new types of intangible
assets (such as a milk quota in Swift v Dairywise (No 1)
[2000] 1 W.L.R. 1177, and an EU carbon emissions allowance in Armstrong DLW GmbH v Winnington Networks Ltd [2012] EWHC 10 (Ch)) as a form of property.
It concluded that although a crypto asset may not be
a thing in action or a thing in possession, that does not
mean it cannot be treated as property.
English common law has proven itself time and again
capable of adapting rapidly to industry changes. The
flexibility and adaptability it shows assists in allowing disputes to be resolved in a commercially sensible manner.
Authors:
Anna Myrvang, Partner
Saskia Wolters, Associate
Stay up to date with Clyde & Co
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Mr Justice Bryan also noted that cryptocurrencies met
Lord Wilberforce’s criteria of property included in
National Provincial Bank v Ainsworth [1965] 1 AC 1175,
because cryptocurrencies are (i) definable; (ii) identifiable by third parties; (iii) capable in their nature of assumption by third parties; and (iv) have some degree
of permanence.
In Tulip Trading Ltd v Bitcoin Association for BSV [2023]
4 W.L.R. 16 [24] the Court of Appeal endorsed the position as set out in Mr Justice Bryan's judgment in AA
v Persons Unknown and confirmed that a crypto asset
such as Bitcoin is property.
William H. Purcell Consulting, Inc. based in Bedminster, New Jersey, provides
investment banking expert witness testimony to attorneys and law firms nationwide and
The Ministry of Justice in March 2020 requested the
Law Commission to review the law on this topic, further to which the Law Commission published its final
report regarding digital assets on 28 June 2023. This
report noted the position reached in common law in
England and Wales as set out above, but also that, because of the evolving nature of the technology and the
digital asset market, there remains some complexity
and legal uncertainty. Therefore, the Law Commission recommended a tripartite approach to law
reform:
worldwide in complex cases involving a wide range of investment banking and finance
issues worldwide.
William H. Purcell has over 50 years experience in almost every area of investment
banking, including over 25 years of experience as an expert witness he has acted as an
investment banking expert in over 210 cases.
Mr. Purcell has represented both plaintiffs and defendants in the courts and before
mediation and arbitration panels, cases include; M&A issues and financing matters
involving debt or equity, public offerings or private placements, taxable or tax-exempt
issues, securitizations, joint ventures, and partnerships. He has been retained as an
expert witness by government regulatory agencies including the Securities and
Exchange Commission (SEC), the Internal Revenue Service (IRS), the Department of
Justice (DOJ), and the U.S. Attorneys Office.
Areas of expertise include;
• Over 210 expert cases and retained by over 150 law firms.
• Due Diligence issues
l Firstly, it concluded that common law in this area is
relatively certain and it recommended prioritising
common law development.
l Secondly, it suggested targeted statutory law reform
to confirm and support the existing common law position regarding a third category of personal property.
l Thirdly, although common law would be better able
to keep up with changes and increasingly advanced
technology than statutory law reform, it recommended
that arrangements are made for the provision of
further guidance from industry experts to support
both the common law and statute.
• Mergers & Acquisitions
• Merger process issues
• Fairness Opinions
• Entire Fairness M&A Issues
• Leveraged buyouts and recapitalizations
• Bankruptcy Issues
• Criminal cases
• Solvency opinions
• Valuations
• Advice to Special Committees of Boards
• Fiduciary duty issues
• Corporate governance issues
• Fee issues and compensation issues
• Damage issues and analysis
• Lender liability and lending issues
• Venture capital
• Leasing and real estate financing
• Lender Liability
• Financing of Debt and Equity
• Financing transactions of both debt & equity • MAC and MAE issues
• Fee Issues
• Document Interpretation and Standards
• Structured finance
• Document interpretation
Contact: William H Purcell Consulting
Tel: (+1) 908.781.1803 - Mobile: (+1) 908-581-1203
Email: williampurcellconsulting@gmail.com
Website: www.purcellbanking.com
225 Cedar Ridge Road, Bedminster, New Jersey, Unites States, NJ 07921
Area of work: Worldwide
Further to the Law Commission’s recommendation of
targeted statutory law reform, it published the Digital
EXPERT WITNESS JOURNAL
• Disclosure issues
• Securities issues
57
AUGUST 2024
