Property (Digital Assets etc) Act 2025: Clarity for the Digital Era

The Property (Digital Assets etc.) Act 2025 (the “Act”) has now received Royal Assent, marking a pivotal moment in the legal recognition of digital assets.

Clause 1: A Foundational Shift

Clause 1, described as the “engine room” of the Act, is now law following Royal Assent on 2 December 2025. It emphatically confirms that digital or electronic assets can be personal property even if they fall outside of the two traditional property categories of “things in possession” (a tangible object like a watch) or “things in action” (a right enforceable by legal action, such as a debt). 

This clarification directly implements the key recommendation of the Law Commission’s 2023 Digital Assets Report to remove ambiguity and align the law with technological realities. Lawmakers highlighted how this clarification will provide legal certainty, boost the UK’s economic competitiveness, and ensure readiness for the digital era. 

Our earlier commentary, A third kind of property - digital assets, noted the Act’s deliberate brevity and reliance on common law tests. Rather than listing specific asset types, the Act adopts a principle-based framework, allowing courts to determine case by case whether a digital asset possesses the necessary characteristics, such as distinctiveness, control, and assignability, to qualify as property. This flexibility ensures the law can adapt to technologies “not yet even imagined”, much in the way common law has historically evolved to accommodate new forms of value.

Crucially, Clause 1 does not automatically make every digital thing property, but it paves the way for fairer outcomes, ensuring that form does not dictate the rights that attach to them. This principled compromise between the extremes of over-regulation and judicial abstention futureproofs the law and reflects confidence in judges to shape the law incrementally.

Policy Ambition: Legal Certainty and Global Competitiveness

The Act forms part of the UK’s broader ambition to remain a global leader in digital assets and law. Legal clarity ensures the UK’s strong fintech ecosystem retains its competitive edge and is not ceded to other jurisdictions. For businesses, the leveraging of the agility and adaptability of the English legal system provides a secure foundation for commercial transactions involving digital assets.

Fintech firms, crypto exchanges, and institutional investors can operate with greater confidence, knowing that digital assets are recognised as property under English law. This clarity supports the development of crypto lending markets, secured transactions, and smart contract enforceability. It also enhances the UK’s attractiveness as a forum for digital asset litigation and dispute resolution.

The Act’s alignment with regulatory developments, such as the anticipated financial market infrastructure and digital securities sandboxes, further integrates digital assets into the UK’s financial and legal infrastructure, sending a strong signal that English law is open for business in the digital age.

Implications for Clients

1. Private Clients and Estate Planning: 

Digital assets, such as cryptocurrencies, NFTs, domain names, and online accounts, can now be confidently included in wills and estate plans. Executors and personal representatives will have a firmer legal basis for collecting, valuing, and distributing these assets.

Importantly, the Act does not override contracts or privacy laws. Many digital services are governed by their own terms of service, so estate plans should empower personal representatives and families should be advised on retrieval processes.

2. Asset Protection and Trusts: 

With official recognition, digital assets can be integrated into wealth management structures. For example, high-value crypto holdings or digital art can be settled into a trust, included in prenuptial agreements, or used as collateral for loans, with greater confidence that courts will uphold those arrangements. Since the law has clarified that digital assets can be possessed and charged (subject to technical mechanisms), insurers and custodians may develop more products for protecting and increasing digital wealth, knowing the ownership and risk can be clearly defined. 

3. Fraud, Theft and Recovery: 

Victims of fraud or theft involving digital assets will benefit from clearer legal remedies. In the wake of increasing digital crime, judges have been inventive in granting interim relief (such as freezing orders and disclosure orders against exchanges). Now, with statutory confirmation, victims are on much firmer footing. Courts can now issue proprietary injunctions and apply established property law principles, such as tracing and conversion, to digital assets. Likewise, law enforcement will benefit in confiscation or seizure cases, and civil asset recovery specialists can deploy a full toolkit of property-based claims without facing a jurisdictional debate about whether there was “property” to begin with.

4. FinTech and Financial Markets:

By clarifying ownership rights, the Act lays a solid foundation for commercial transactions involving digital assets. With rights akin to other asset classes, firms developing products around cryptocurrencies or digital collectibles can reassure customers that their holdings enjoy legal status and recourse. This may be foundational for institutional adoption, with banks or investment funds more likely to deal in cryptoassets if they know the assets are subject to clear property rights. 

As a result, it may become easier to secure financing or insurance for digital assets as lenders and underwriters prefer assets that the law will reliably enforce rights over. By expressly permitting digital assets to be collateral and a part of insolvency estates, the Act supports a developing crypto lending and secured transactions market.

Looking Ahead

The revision of the centuries-old definitions of property reflects how transformative technologies like blockchain have become. The Act places the UK at the vanguard of jurisdictions adapting private law to the digital age. Lawmakers, industry groups, and legal commentators are optimistic that the Act will enhance legal certainty for individuals and businesses, while allowing the flexibility for the law to grow and adapt organically as new use cases arise.

For clients and practitioners, the key takeaway is that digital assets are no longer stand on the outskirts of the law, having been placed firmly within the fold of property rights. With this, comes the responsibilities that property attracts (such as including digital assets in compliance, accounting, and estate plans), but also brings robust protections. The old dichotomy of tangible vs intangible now has a new sibling in statute, and this third category could be as important in the 21^st century as the others have been for centuries.

This legislation represents a landmark in the modernisation of English property law. It confirms that digital assets are not second-class citizens in the eyes of the law, but fully-fledged property, capable of ownership, transfer, and protection. For individuals and businesses alike, it offers clarity, confidence, and a robust legal framework for the digital age.

If you have any questions in relation to the topics raised above, please contact one of us to discuss further.  You can read more thought-leadership like this by subscribing to our monthly financial services regulation update by clicking here. You can meet our financial services experts by clicking through to our financial services team page here and our technology experts by clicking here.

This article was written by Will Cadbury.