The Property (Digital Assets etc) Act 2025: English law, cryptoassets and digital asset disputes
This article examines what the new legislation means for those in financial services and/or dealing with digital assets (including funds, businesses and individuals) and how this shapes digital asset disputes, specifically in instances of fraud, recovery and insolvency.
The Property (Digital Assets etc) Act 2025 (the Act) came into force in England, Wales and Northern Ireland on 2 December 2025. It confirms that certain digital assets, including cryptoassets, can be treated as ‘objects of personal property rights’ under English law, which is a key foundation for resolving digital asset disputes.
For businesses and individuals who hold, trade in or safeguard digital assets, it marks a significant legal development, one that further consolidates English law’s position as a leading jurisdiction for digital asset disputes (including claims involving fraud, tracing, freezing injunctions and enforcement).
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England & Wales: a hub for digital asset disputes and digital asset business
International competition for digital asset business is real and intensifying, particularly across financial services, investment funds, payment firms and custody providers.
By providing statutory confirmation that digital assets are capable of attracting personal property rights, the Act delivers something that many competing jurisdictions cannot easily replicate - clearer access to proprietary remedies (including freezing injunctions and disclosure orders) where digital assets have been stolen or are in dispute, often the starting point for digital asset disputes. Those remedies are underpinned by the certainty of statute, the flexibility and depth of the English common law and a commercial judiciary experienced in complex financial disputes involving novel technology.
As a result, England & Wales is an increasingly attractive jurisdiction for organisations working with digital assets and cryptoassets, including for:
- Digital asset transactions, financing and fund structures
- Custody, safeguarding and trust arrangements involving cryptoassets
- Litigation and arbitration relating to digital asset disputes
For those in the financial services sector, particularly when structuring products, appointing custodians, or selecting governing law and dispute resolution clauses, this additional legal certainty is a practical advantage.
Practical reality: are your digital assets protected under English law?
The Act is deliberately minimalist (it contains only two clauses). That leaves scope for English case law to develop quickly alongside fast-moving digital asset technology, including in relation to ownership, tracing, recovery and enforcement.
While the Act is a welcome development, it does not remove the practical difficulty (and risk) of protecting digital assets from fraud or loss in an insolvency, particularly where assets are held through exchanges, custodians or other intermediaries.
- Much recent digital asset litigation has focused on recovering cryptoassets following fraud and misappropriation
- The Act strengthens the footing for proprietary remedies (for example, freezing injunctions) by reducing ‘is it property?’ arguments at the start of claims, supporting faster court applications where speed is critical
- A key unresolved issue, relevant to digital assets and traditional assets alike, is whether a bank or other financial institution that receives misappropriated funds owes a duty to take steps to prevent dissipation. Recent case law has been conflicting (see Barclay-Ross v Starling Bank Ltd [2025] EWHC 2158 (KB) and Santander UK PLC v CCP Graduate School Ltd [2025])
- A practical concern arises where a financial institution, custodian, exchange and/or investment fund holds digital assets on your behalf: what happens if that firm becomes insolvent and can the assets be recovered?
- Even with a proprietary basis for customer asset claims, outcomes can depend heavily on the underlying contractual and custody documentation
- In Re Taylor, Joshua James and another [2025] SGHC 104, the Singapore High Court, considering unclaimed cryptocurrencies held by a digital asset exchange in liquidation, held that unambiguous language is required for customer assets to be held on trust. Generic or ambiguous custody terms will not suffice. While the decision is not binding in England and Wales, the same trust and custody questions are likely to be tested before the English and Welsh courts
- For anyone holding digital assets through a custodian or exchange, the question is straightforward: does your agreement clearly establish that those assets are held on trust for you? If not, insolvency may leave you as an unsecured creditor
- The Act strengthens the basis for treating cryptoassets and other digital assets as property under English law
- That status can support faster fraud recovery strategies using proprietary remedies, including freezing injunctions
- Customer asset protection on insolvency may turn on whether custody terms clearly create a trust
- Governing law and dispute resolution clauses remain central to risk management in digital asset disputes and digital asset transactions
Taking stock: next steps and risk management for digital asset businesses
Anyone holding, transacting in, or responsible for safeguarding digital assets should consider the following steps:
- Review custody terms and agreements to ensure they clearly establish the intended legal relationship and would withstand scrutiny in an insolvency
- Assess fraud response procedures in light of the developing and, as yet, unresolved case law on receiving banks' obligations
- Consider whether English law should be your governing law of choice for digital asset transactions and digital asset disputes, including in custody agreements and dispute resolution clauses and take advantage of the certainty the Act now provides
The legal framework is working to keep pace with digital asset development. The question now is whether you and your arrangements are too?
How we can help
If you would like to discuss any of the issues raised, digital asset disputes, fraud recovery, custody and trust structures, or insolvency risk, please contact Kelly Whittaker or Daisy McCaulder.
The content of this page is a summary of the law in force at the date of publication and is not exhaustive, nor does it contain definitive advice. Specialist legal advice should be sought in relation to any queries that may arise.
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