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UK Statement on Legal Status of Cryptoassets and Smart Contracts

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A UK Government-backed, industry-led initiative has published an expert legal statement recognising cryptoassets as property and smart contracts as enforceable agreements under English law. The statement is published by the UK Jurisdiction Taskforce (UKJT), a taskforce of the UK’s Lawtech Delivery Panel.

The report concludes that:

  • Cryptoassets are, in principle, to be treated as property under English law. They are not disqualified from being property by their distinctive features (intangibility, cryptographic authentication, use of a distributed transaction ledger, decentralisation, rule by consensus), nor by the fact that they are “pure information”.
  • A smart contract (characterised by its “automaticity”) is capable of having contractual force, although whether the requirements for an enforceable contract are met in a given case will depend on the parties’ words and conduct.

Uncertainty over the legal status of cryptoassets and smart contracts is often blamed for hindering their adoption. The statement has been developed by leading barristers in consultation with technical, legal, judicial and academic experts, and therefore provides some comfort that cryptoassets and smart contracts have a solid foundation in English law. However, the statement has no binding legal force and so, although it provides the “best possible answer”, is unlikely to be the final word.

The UK is the first jurisdiction to produce an authoritative statement on these issues. At the launch event of the report, the speakers highlighted several next steps for the UK:

  • Regulation of dealing in cryptoassets, and remedies. Now that the legal status of cryptoassets and smart contracts has been confirmed, the stage is set for regulators to consider what specific regulation is necessary, and for the courts to consider what remedies are appropriate in disputes.
  • Legislative confirmation of legal status. Although the report concludes that the legal status of cryptoassets and smart contracts is clear under English common law, the next step is for the UK Law Commission to consider whether legislation in this area is necessary.

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Sue is a partner in Baker McKenzie's IP, Data and Technology team based in London. Sue advises on complex technology and commercial deals and projects.
Sue has advised on technology projects for over 24 years. She advises on strategic technology deals including cloud, outsourcing, digital transformation and development and licensing. She also advises on a range of legal and regulatory issues relating to the development and roll-out of new technologies including AI, blockchain/DLT and crypto-assets. Sue is a key member of our global AI practice and leads on responsible AI governance and AI related transactional projects at the firm.
Sue co-leads our Commercial practice in London. On the commercial side, Sue's practice involves advising on a range of strategic commercial agreements including supply and distribution agreements, manufacturing agreements, warehousing and logistics agreements, IP licensing and assignment agreements, joint development agreements, collaboration agreements and franchising agreements. She also supports clients in preparing terms of business and related documentation for new offerings and coordinating global roll-outs.
Sue also co-leads our transactional practice in London supporting our Corporate teams and providing strategic support on the commercial, technology and intellectual property aspects of M&A transactions, including advising on complex and strategic ancillary commercial, IP and transitional agreements related to acquisitions, disposals, carve-outs and JVs.
Sue is ranked as a leading lawyer in Chambers for Information Technology & Outsourcing and Fintech Legal and in Legal500 for IT & Telecoms, TMT, Commercial Contracts and Fintech. Clients say of Sue: "She is pragmatic and focused on getting a sensible deal done" and "She quickly builds relationships with ease and leverages her network to gain valuable insight. Her knowledge of technology and the impact of existing and upcoming laws is evident. Her professionalism builds trust and we have been grateful for her responsiveness on urgent matters".

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