- A panel of legislators yesterday decided that digital assets in the UK are classified as property and not as securities.
- This paves the way for the further growth of cryptocrcurrencies such as ether and XRP.
In the United States of America, Bitcoin and Ethereum have been classified as commodities by the Commodity Futures Trading Commission (CFTC) and are therefore not covered by the Securities Act. Capital goods are taxed differently and companies that carry out an ICO also have to meet fewer requirements when selling their tokens. There is positive news from the UK in this area.
Digital assets are classified as property
In the UK, a panel led by the Supreme Court Judge, Sir Geoffrey Vos, yesterday decided that cryptocurrencies such as Ether and XRP are classified as property and therefore not covered by the Securities Act. This decision brings clarity to the UK and creates a new sense of security among many investors.
Until now, the legal classification of digital currencies has not been clearly regulated and many individuals and companies have been swayed by uncertainty. As the news portal TheTimes reports, Vos states during the trial that this decision will pave the way for cryptocurrencies into the mainstream:
The answers to those legal questions will provide a dependable foundation for the mainstream utilisation of cryptoassets and smart legal contracts.
According to the results of the negotiation, cryptocurrencies meet all the definition requirements to be classified as “property”. Cryptocurrencies have very specific characteristics, but these are consistent with the definition of property and do not lead to exclusion. The court decision states:
[…] novel or distinctive features possessed by some crypto-assets — intangibility, cryptographic authentication, use of a distributed transaction ledger, decentralisation, rule by consensus — do not disqualify them from being property.
This decision has been praised by numerous decision-makers in the country and prepares for the further growth of cryptocurrencies in the UK. Lawtech’s government-sponsored Tech Initiative is also delighted with this decision and predicts that by 2027 10% of the value of global GDP will be processed through the blockchain.
The United Kingdom is thus creating regulatory clarity and optimal conditions for investors and companies wishing to raise capital in the future through an Initial Coin Offering (ICO).
USA seems to lose its pioneering role
Mike Novogratz, multiple billionaire and Bitcoin Bull, reported earlier this month that the US could lose its pioneering role in Blockchain and Fintech to other nations such as China if the regulators continue to work slowly and oppose progress. He states:
If the US regulators don’t allow for fintech innovation, the Chinese will eat our lunch. Crypto and blockchain will be part of the financial and consumer infrastructure in the future.
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Although the legal situation in the USA for Bitcoin and Ethereum is currently clarified, new questions will arise as soon as Ethereum 2.0 is activated. Joseph Lubin, co-founder of Ethereum, explained at the Hong Kong FinTech Week that new cryptocurrencies in the USA could possibly be classified as securities and thus not grow in the same way as BTC or ETH.
It remains to be seen which direction the US regulatory authorities will take.
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