The UK government brought the Property (Digital Assets etc) Act 2025 into force on 2 December. The Act is intended to clarify the status of digital assets by confirming that digital assets can attract personal property rights even though they fall outside traditional classifications.
Because digital assets are fundamentally different from both physical assets (‘things in possession’) and from rights-based assets (‘things in action’) like debts and financial securities, the Law Commission recommended in 2023 that legislation should be drafted to confirm the existence of a ‘third’ category of personal property, into which crypto-tokens and potentially other assets could fall.
The Property (Digital Assets etc) Act 2025, based closely on the Law Commission’s draft bill, makes clear that a thing is not prevented from being the object of personal property rights simply because it does not fit into either of the existing categories.
The Act adopts a streamlined approach, simply confirming that digital assets can qualify as property and leaving it to the courts to delineate the boundaries and rights that attach to this “third category” through case law.
In doing so, it complements the trajectory of recent English case law treating crypto assets and Non-Fungible Tokens (NFTs) as property and provides a clearer platform for the owning, transferring and inheriting of digital assets.
It also offers improved investor and consumer protection supporting the ability to recover misappropriated assets and seek reliefs, although it remains to be seen how the courts will navigate the inherently cross-jurisdictional nature of digital assets, which by design do not originate or ‘live’ in any particular jurisdiction.
The most immediate impact of the Act is that digital assets now clearly form part of a person’s estate and can be gifted, included in residue, held in trust and valued for tax planning. Digital assets are already taxable under HMRC guidance, but the Act reinforces their treatment as property for inheritance tax purposes. This means non-disclosure of digital holdings becomes more serious in probate disputes.
For trustees, the legislation supports their duty to manage digital value responsibly. A trustee holding cryptocurrency must now take appropriate steps to secure private keys, asset investment risk and record decisions rationally. The Act does not regulate custody, security or valuation of digital assets, which remain matters for professional standards and judicial development.
