Insolvency Law and Digital Assets: Expert Panel Declares English Law is Capable
The UK Jurisdiction Taskforce (UKJT) of the LawTech Delivery Panel has declared that English insolvency law is well-equipped to handle disputes involving digital assets. This announcement comes in the wake of increased volatility in the digital asset markets and the collapse of several high-profile digital asset exchanges, platforms, and funds.
In its third legal statement on digital assets and English insolvency law, the UKJT emphasized the importance of robust insolvency processes to ensure fair and predictable outcomes in disputes involving digital assets. The panel noted that while the English courts have not yet extensively addressed the application of insolvency law concepts to digital assets, they believe that the existing framework is entirely capable of handling such cases.
The UKJT’s previous legal statement, issued in November 2019, concluded that digital assets could be considered ‘property’ under English and Welsh common law. The panel reiterated this stance in their latest statement, highlighting that the definition of property in the Insolvency Act 1986 is broad enough to encompass digital assets.
However, the panel noted that digital assets are not currently treated as money in the UK, which has implications for their treatment under insolvency law. Despite this, claims to digital assets held by insolvent companies or individuals can still be pursued as claims to recover property, depending on how the assets are held.
Sir Geoffrey Vos, Master of the Rolls, praised the work of the UKJT in clarifying the legal status of digital assets within insolvency law. He highlighted the importance of providing certainty to mainstream investors regarding the recovery of digital assets in insolvency proceedings.
The legal statement follows a public consultation launched in November last year and was drafted by a team of legal experts led by Lawrence Akka KC and David Quest KC. The panel’s findings are expected to provide clarity and guidance to courts in England and Wales and other common law jurisdictions when dealing with disputes involving digital assets.
