UK Jurisdiction Taskforce to consult on digital assets and English insolvency law

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The UK Jurisdiction Taskforce has launched a new public consultation on the treatment of digital assets in English insolvency law.

Crypto assets are 'property'

In November 2019, the UKJT published its seminal legal statement on the status of crypto assets and smart contracts. Since then, there has been widespread acceptance that crypto assets are 'property' for the purposes of English law. And the Law Commission has recently proposed a new, third category of personal property rights to capture digital assets.

Impact on insolvency law

There has been a large amount of activity in crypto insolvency globally since 3AC's collapse in June 2022 and the ensuing crypto winter (including the highly publicised FTX collapse). We are aware of only one UK-based crypto asset exchange insolvency (Dooga Ltd t/as Cubits in December 2018) which pre-dates the current crypto winter by some margin.

This new consultation presents an excellent opportunity to shape the future of English crypto insolvencies in providing persuasive guidance on this previously largely untested subject. The current consultation poses eight questions, and seeks input on any other material issues of concern.

The questions cover the treatment of digital assets as part of the insolvent estate and office-holders' duties in respect of them, avoidance transactions and whether claims to digital assets are monetary claims which can found a statutory demand or winding up petition.

The consultation is open until 4 December 2023, with a public virtual feedback event to be held on 28 November 2023.