- A Two-Sentence Statute, and its implications
On 2 December 2025, the Property (Digital Assets etc) Act 2025[1] (hereafter, the Digital Assets Act 2025) received Royal Assent for England, Wales, and Northern Ireland, concluding final stage of the UK legislative process and entering into force on that very same day.
The entire operative content of the statute is built around a single provision (Objects of personal property rights), 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) a thing in possession, nor (b) a thing in action”.
Despite its minimalist intervention, the Act is indeed the product of several years of Law Commission consultations (hereafter: 2023 Law Commission Report)[2] and its attitude is radical and cautious at the same time: on the one hand, it formally unsettles a classificatory apparatus that has governed English property law for well over a century. On the other hands, it avoids defining digital aspects specifically – and to enumerate specific rights pertaining to digital assets – it operates a major delegation to subsequent judicial developments on the matter. To understand the rationale of such approach, it is necessary to provide an insight on the traditional framework of personal property and, in particular, regarding the distinction between choses in possession and choses in action.
- The doctrinal background: the tertium quid, and the crisis of the bipartition between choses in possession and choses in action in the debate on crypto-assets
The distinction between choses in possession and choses in action is rotted in the Blackstone Commentaries on the Laws of England (1765–1769), in which personal property is organised according to the relationship between the holder and the thing: in the first category – choses in possession – the right coincides with the physical detention of the item; in the second, choses in action are intangible property rights (such as debts or copyright), that can only be enforced or claimed through legal action: the right, in other words, translates into a judicial action and cannot be exercised without resorting to legal proceedings. The classification is therefore based on the nature of the remedy through which the right is enforced, embracing a functional approach.
Historically, this framework has been used to absorb by analogy dematerialised things, such as financial instruments: for instance, bonds, company shares, and contractual rights have been assimilated to choses in action.
Since the first explicit formulation of the exhaustiveness of the bipartition – to be found in Colonial Bank v Whinney[3] – it is clearly stated that «all personal things are either in possession or action. The law knows no tertium quid between the two».
Based on this decision, the expression tertium quid became the canonical reference point for those who maintained the exhaustiveness of the bipartition: it is, therefore, against that formula that every subsequent attempt to recognise digital assets as property has been required to contend.
Later on, and building on the Tertium quid framework, the substantive test for what may constitute the object of proprietary rights was developed in National Provincial Bank v Ainsworth[4], which identified four cumulative requirements: in order to qualify for property rights a thing must be definable, identifiable by third parties, capable of assumption by third parties, and possessed of some degree of permanence or stability (it is worth observing that, while elaborated in the context of matrimonial property, these criteria acquired general application and have been systematically invoked in the subsequent case law).
Unsurprisingly, this bipartite system has been repeatedly challenged in relation to crypto-assets: the issue was initially addressed at a quasi-normative level by the UK Jurisdiction Taskforce (UKJT), in its 2019 Legal Statement on Cryptoassets and Smart Contracts[5]. The Statement – though lacking the status of judicial precedent – reached two conclusions: first, crypto-assets were identified as satisfying the Ainsworth criteria and, therefore, worthy be treated as property; second, the Colonial Bank v Whinney jurisprudence does not exclude the existence of a further categories of personal property, since that case concerned the classification of a specific type of property (company shares), and not the general definition of what may be the object of proprietary rights.
The Statement, thus, re-contextualised Colonial and subsequently, case law has been establishing with increasing firmness that crypto-assets can be recognised as property under English law[6].
Following the relevant case law, the 2023 Law Commission Report, while acknowledging such progresses recommended – rather than codifying a third category of personal property – a narrower legislative intervention: removing the Tertium quid dictum as an obstacle, leaving substantive development to the courts. Accordingly, the Digital Assets Act 2025 implements that recommendation.
- Goals and limits of the regulatory intervention
Unsurprisingly, the main critical analytical point pertaining to the Act, is that the intervention operates exclusively in the negative: while it removes the Tertium quid obstacle, it does not create a positive third category with defined attributes, and – equally significant – does not specify which digital assets qualify as property, and which rights attach to those that do.
At the same time, the four Ainsworth criteria remain the operative test, as courts are required to determine whether any given digital thing satisfies them on a case-by-case approach.
It is noteworthy that, whereas for established crypto-assets (such as Bitcoin and Ethereum) the issue has already been settled previous judgments, novel asset types – including algorithmic tokens or tokenised real-world assets – no answer is currently provided.
Whereas this approach is supposed to improve the overall flexibility and responsiveness of the system – in contrast with a stricter statute, potentially rapidly obsolete in a technologically volatile environment – it remains unclear whether recognition under the Act grants full proprietary rights enforceable against third parties, including in insolvency and in tracing claims, or merely establishes limited entitlements, as the Act provides no guidance on this question.
Additionally, the interface between proprietary rights in digital assets, and the intellectual property rights they potentially embed, is not yet clarified: whereas the Digital Assects Act 2025 may provide the legal basis to confer proprietary status on a digital thing (e.g. a token), the regulation does not affect the normative framework for the copyright in the image, artwork, or audio file it references to, which may vest independently in the creator or a third party
Other concerns relate to the enforcement of proprietary rights in decentralised systems. Recognising a digital asset as personal property in English law, does not solve the problem of establishing mechanisms for its vindication, which are generally pertaining to the specificities of the technological means and platforms on which such assets circulate.
- The Digital Assets Act 2025 in the broader regulatory framework
Intuitively, the Act must be located within the wider legislative and regulatory landscape pertaining to digital assets in the UK: in 2023 the Financial Services and Markets Act already brought crypto-assets within the scope of regulated financial activities, and the draft Financial Services and Markets Act 2000 (Regulated Activities and Miscellaneous Provisions) (Cryptoassets) Order 2025, presented last April 2025, brings a broad range of crypto-related activities under the Financial Conduct Authority’s supervisory perimeter, requiring authorisation for crypto-asset exchanges, custody providers, and issuers of qualifying stablecoins, with the FCA’s formal authorisation regime for crypto firms expected to commence in 2026.
It is worth observing that, in general terms, the two tracks are analytically distinct: the Digital Assets Act 2025 is a private law instrument, as it concerns the proprietary characterisation of digital assets in contracts between private parties, litigation, insolvency, and for commercial transactions in general. On the other hand, FCA regulatory framework is a public law – and, more specifically, financial markets regulation – instrument, addressing the conditions under which firms may conduct crypto-related activities in the UK market.
Hence, a crypto-asset may simultaneously be the object of personal property rights under the Act and be subject to mandatory FCA authorisation requirements when traded commercially: indeed, the fact that an asset is legally recognisable as property does not exempt it from being subject to other specific regulatory requirements, and conversely, to regulatory authorisations that do not confer or modify proprietary rights.
- Unsolved uncertainties
At the same time, several questions remain unresolved: inter alia, conflict of laws rules for cross-border transactions involving digital assets are still unsettled; at the same time, the concept of “control” over digital assets, which remains central to security enforcement and insolvency analysis – and that is part of the framework the Act left open – is still unsettled in UK case law.
Overall, it seems that the Digital Assets Act 2025, while undoubtedly historically significant, still displays regulatory limitations. Whereas the removal of the Tertium quid endorses an incremental judicial development over codification, the Parliament has placed a substantial burden on the courts to operate this qualification in practice. Whereas the Act has been presented as an acknowledgment of property status of cryptocurrencies
More in general, the choice to demand to adversarial litigation this follow-up evaluation, while consistent with a traditional common law approach, produces answers only when disputes are brought, before courts with jurisdiction. In the interim, stakeholders will have to operate without knowing whether a specific asset they hold or transfer carry full proprietary protection enforceable against third parties, or whether they give rise only to more limited personal entitlements. This evaluation has major consequences, as it confers – amongst others – priority in insolvency, the availability of tracing claims, and the viability of proprietary injunctions.
In such a sense, whereas the Act appropriately removes the historical obstacle established in Colonial, it does enhance per se the certainty that commercial actors require to conduct operations involving digital assets under English law.
[1] https://www.legislation.gov.uk/ukpga/2025/29.
[2] https://lawcom.gov.uk/project/digital-assets/.
[3] [1885] 30 Ch D 261.
[4] [1965] AC 1175.
[5] https://lawtechuk.io/ukjt/legal-statement-on-cryptoassets-and-smart-contracts/.
[6] In AA v Persons Unknown (2019), it was held Bitcoin capable of sustaining a proprietary injunction, rejecting the exhaustiveness of the traditional bipartition. Osbourne v Persons Unknown (2022) extended the same reasoning to NFTs. Lastly, Tulip Trading (2023) confirmed – albeit incidentally – the property status of crypto-assets at appellate level.
