Property in the legal sense does not refer to real estate such as land or buildings. Rather it encompasses any tangible or intangible asset capable of being owned. However, with the rapid development of technology, an important question emerged: can digital assets be owned in the same way as traditional property?
Until December 2025 digital assets were not formally recognised as ‘property’ under English law. The Property (Digital Assets etc) Act 2025 changes this position by allowing certain digital assets to be recognised as property, meaning they attract the same rights as any other form of personal property.
This blog explores what the Act provides, how it was developed, what may be categorised as a digital asset and the wider implications of the new legal framework.
What was traditionally categorised as property?
Historically, the law separated personal property into two categories:
- A thing in possession: physical, tangible objects
- A thing in action: intangible rights that cannot be physically possessed but can be enforced against any other person (such as debts, shares or trademarks).
Together these categories encompassed most proprietary interests including intellectual property and financial assets.
However, the rise of digital assets that have a real-world value, particularly crypto currencies, gave rise to uncertainty.
What is a Digital Asset?
A digital asset is broadly defined as any content, data or instrument that exists in a digital (binary) format and is stored or owned electronically.
Many digital assets carry significant real-world value, prompting the need for legal recognition and protection. However a digital asset does not fall neatly into the two traditional categories. A digital asset certainly isn’t physical. But nor do digital assets fit within the concept of a “right” because the law did not recognise that ability of a digital asset holder to prevent interference with the digital asset.
Legislative journey and framework
The legal recognition of digital assets has evolved through both case law and law reform initiatives.
In AA v Persons Unknown [2019] EWHC 2556 (Comm), the High Court held that bitcoin could be considered property even though it does not fulfil the traditional classification of property, signalling one of the early signs of judicial willingness to treat digital assets as property and adapt existing principles.
In 2021 the UK’s Law Commission commenced a review of the then-existing legal framework and issued a consultation to consider whether a third category of personal property needed to be established in law. The Law Commission’s final report, issued in 2023, recommended that although the common law could adapt the traditional categories, legislation would be needed to confirm that a digital asset could be a considered a property right.
In 2024 the Government introduced the Property (Digital Assets etc) Act 2025 to the House of Lords. It adopted the Law Commission’s final recommendations. The Act became law in December 2025.
The aim of the Act is to constitute a clear statement from Parliament that a digital asset can be property, even if it does not fall into the traditional categories of property. Section 1 of the Act States:
“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.”
The Act uses the term ‘thing’ without providing a strict definition. The Law Commission has stated that a ‘thing’ should have its ordinary meaning, referring to everything that might be considered for classification for a legal concept.
To qualify as property, a ‘thing’ is likely to exhibit the following characteristics:
- Definable
- Identifiable by third parties
- Capable by nature if assumption by third parties
- Having some degree of: (a) permanence or stability; (b) excludability; (c) rivalrousness; (d) separability; and (e) value
Rivalrous-ness is particularly significant and is derived from common law definitions of property. A ‘thing’ is rivalrous if one person’s use prevents simultaneous use by another. This helps distinguish property like digital assets from indefinitely replicable items (such as standard documents), which are less likely to attract property rights.
As such, Parliament largely left it to the courts to develop the category of digital assets as a property right, such as its boundaries and the rights associated with a digital asset.
The most recent illustration is the Court of Appeal case R v Lakeman [2026] EWCA Crim 4.
The case concerned a hack by the defendant into 68 player accounts in the online roleplaying game Runescape, to ‘steal’£543,123 worth of in game currency (gold pieces).
The question for the Court was whether in game currency was ‘property’ for the purposes of the Theft Act 1968.
The Court agreed that the correct approach was to examine whether the ‘gold pieces’ themselves classed as property, rather than the code they ran on. The Court explained that the physical existence of the gold pieces is not a necessity to be classified as property. The gold pieces had real-world existence which manifested as their appearance on the screen and in real world trading for money or other items with both real world and virtual value, distinct from their code. The position is similar to cryptocurrencies which are accepted as property.
Moreover, the Court focused on the common law definition of property, which states that property must be ‘rivalrous’ (as set out above). Taking gold pieces from one account deprives the victim of the use of those gold coins – therefore the virtual gold could be considered rivalrous.
By way of summary, the Court held: ‘it would be strange indeed if something which is regularly bought and sold for real money or money’s worth, and which clearly may be the subject of dishonest dealing which deprives the owner or possessor of the benefit which it confers, were not capable of being stolen.’
Wider effects of the Act
The Act has several important practical implications:
Stronger protections: Enforceable property rights with meaningful legal remedies for the owners of digital assets that classify as property, including protection against theft or misuse.
Regulatory development: The Act forms part of a comprehensive regulatory landscape. Although still fairly new, the Act’s influence on the Financial Conduct Authority has encouraged the development of an extensive crypto assets regulatory framework focused on consumer protection.
Estate planning and insolvency: Recognising assets such as crypto currencies as property allows executors and administrators to distribute them with greater certainty and confidence. In divorce proceedings, digital assets will have to be disclosed meaning promoting fairness between the parties.
Commercial use and finance: Recognising digital assets as property allows them to be utilised as collateral in financing arrangements. Lenders may be now more willing to accept candidates who possess digital assets that can be recognised as property. Potentially expanding access to new sources of capital for businesses, facilitating growth in the digital economy.
Final thoughts
The Property (Digital Property) Act 2025 represents a significant step in modernising English property law. By recognising digital assets within a flexible third category, it supports the UK’s development as a leading jurisdiction for digital innovation while maintaining legal certainty and protection.
If you have any questions about the above, please contact us here, or contact Neil Williamson or Colin Lambertus directly.
