Key takeaways
Digital assets confirmed as protectable property
Clear legal status boosts confidence in handling digital assets.
Flexible framework supports innovation and growth
Courts retain agility to assess new asset types effectively.
UK strengthens its digital‑economy leadership
Greater certainty makes the UK an attractive jurisdiction.
In December 2025, the Property (Digital Assets etc) Act 2025 came into force. The legislation was first introduced in September 2023, marking a significant step toward modernising property law for the digital era. The Law Commission has noted that 'Property and property rights are vital to modern social, economic and legal systems and the law provides important protections for property owners.' The Property (Digital Assets etc) Act 2025 has received Royal Assent – Law Commission
Purpose of the Act
The PDAA 2025 closes an important gap in property law by confirming that certain items – including digital or electronic assets such as Bitcoin or other crypto-tokens – are not excluded from attracting property rights simply because they do not fit within the two traditional categories of personal property established by case law:
Things in possession: Physical, tangible items.
Things in action: Rights enforceable only through legal proceedings, such as debts or contractual claims.
The Law Commission has also noted that the PDAA 2025 '…makes clear that a thing is not prevented from being the object of personal property rights merely because it does not fit into either of the existing categories. This reflects the trajectory of recent case law, but removes the lingering uncertainty that remains in the absence of a definitive statement from an upper court. The Act leaves it to the courts to develop this 'third category' of personal property by delineating its boundaries and the rights that attach to 'third category' things. '
What the Act does and does not do
The Act does not itself introduce a new category of property, neither does it define which digital assets automatically qualify as property. Instead, it preserves the existing framework by allowing courts to apply established common law tests when determining whether an asset attracts property rights. This case-by-case approach provides considerable flexibility, ensuring that the law can adapt and evolve in step with technological innovation without imposing rigid definitions that could quickly become outdated.
It is noteworthy that the PDAA 2025 is exceptionally short – there are only 2 clauses, the main operative provision stating:
'1. Objects of personal property rights
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.'
Whilst brief in nature, the PDAA 2025 has wide-ranging effects, in particular removing any uncertainty about how cryptotokens are to be treated. Although, the Courts had already had to consider these issues on a number of occasions in cases such as - D’Aloia -v- Persons Unknown and Ors [2024] EWHC 2342 (Ch) (see our previous article - Cryptocurrency Fraud: Landmark Decision | Hill Dickinson]. In a constantly evolving digital landscape, reducing the scope of arguments about the nature of emerging cryptotokens is highly advantageous.
Why this matters
The PDAA 2025 delivers several practical benefits:
Legal certainty for digital assets: Crypto-tokens and similar assets can attract property rights even if they do not fit neatly into traditional categories.
Reduced disputes: By clarifying the position of digital assets, the PDAA 2025 eliminates arguments over whether such assets qualify as property.
Jurisdictional advantage: England, Wales and Northern Ireland are now positioned as attractive jurisdictions for transactions and litigation involving digital assets, reinforcing their role as leading fora in digital commerce.
Impact
The legislation means that digital assets are treated the same as other personal property in terms of, for example – theft/fraud - owners of digital assets can take action when those assets are unlawfully taken, security for loans – digital assets can now be legitimately used as security, payments to creditors in insolvency situations – digital assets will be treated as part of the assets available to creditors and for probate purposes – digital assets will be included as part of a deceased’s estate.
Whilst the PDAA 2025 does not provide all the answers, for businesses, investors and individuals operating in the digital asset space, this legislation provides clarity and confidence and most importantly flexibility. It represents a significant step toward aligning property law with the realities of a rapidly evolving digital economy.
This article was co-authored by Paralegal, Maddie Rimmer.
