The third category of property, the Digital Assets Bill, becomes law in England and Wales

The Property (Digital Assets etc) Act 2025 (the Act) received royal assent on 2 December 2025.

The legislation closely follows recommendations made by the Law Commission for England and Wales (the Law Commission) in 2023.

These recommendations sought to clarify that digital assets such as crypto-tokens and non-fungible tokens can be the subject of personal property rights, even though they do not fit into either of the traditional two property categories.

These two categories are:

• 'Things in possession' (physical property) and
• 'Things in action' (claims that must be pursued through litigation).

The third category of property:

• The Law Commission's report concluded that digital assets, though property, were fundamentally different from both physical assets and rights-based assets such as debts and financial securities. It said a third category of property was therefore needed.

The new Act codifies this position, removing the uncertainty that would otherwise remain absent a definitive ruling from an appellate court.

The Law Commission was reported to have said.

• ‘[The Act] will enable the courts to develop the law in ways that accommodate the unique features of these emerging assets, while ensuring that they can be protected as objects of property rights’,
• This will enhance the rights of users of crypto-tokens and improve legal certainty for individuals and businesses.’
• However, the Act does not attempt to enumerate the exact assets that fall within this third category.
• Instead, it leaves it to the courts to develop case law delineating the boundaries and rights that attach to 'third category' assets, of which new types are continually emerging as the technology develops.

Law firm Russell Cooke was reported as saying:-

• Digital assets are more diverse than simply being crypto and decentralised digital currencies, .
• 'They are better defined and thought of as digital representations of rights, obligations, liabilities and value created, stored, transferred and transacted digitally.'
• 'It is often uncomfortable to have significant residual uncertainty around how new commercial products and services will be treated’,  
•  ‘Digital assets are going to continue to be a growing issue, and their presence in our national economy as well as on the international economic stage means there is growing pressure to address regulatory and legal matters. '
• The Act has not delivered certainty regarding property rights generally. Its impact will be dependent on future litigation and judicial interpretation.
• 'The flexibility and broad drafting of the provision does leave residual uncertainty for the judiciary and various regulatory bodies to deal with, '  

Still under consideration by the UK government.

• Other related matters considered by the Law Commission, including collateral arrangements for crypto-tokens, are still under consideration by the UK government.

Scotland

• The Scottish Parliament's Economy and Fair Work Committee is developing a parallel version, the Digital Assets (Scotland) Bill, which confirms that digital assets can be recognised as incorporeal moveable property and will confirm how ownership can be established and acquired.

Sources

• https://www.step.org/industry-news/digital-assets-bill-becomes-law-england-and-wales?utm_source=news+digest&utm_medium=email&utm_campaign=UK+Industry+News+Digest+41225
• Law Commission
• https://lawcom.gov.uk/news/the-property-digital-assets-etc-act-2025-has-received-royal-assent/
• Law Commission (recommendations)
• https://lawcom.gov.uk/project/digital-assets/
• UK parliament (text of Act)
• https://bills.parliament.uk/bills/3766/publications
• Russell Cooke
• https://www.russell-cooke.co.uk/news-and-insights/news/the-new-virtual-frontier-uk-law-prepares-to-put-digital-assets-on-a-statutory-footing
• Eversheds Sutherland
• https://www.eversheds-sutherland.com/en/united-kingdom/insights/property-digital-assets-etc-bill-property-rights-in-a-digital-landscape
• STEP UK News 16 October 2025: Scottish Government calls for views on Bill recognising digital assets as property
• https://www.step.org/industry-news/scottish-government-calls-views-bill-recognising-digital-assets-property