Published: December 23, 2025 12:49 PM IST 
On 2 December 2025, the United Kingdom moved digital assets out of the legal grey zone. With Royal Assent for the Property (Digital Assets etc) Act 2025, Parliament confirmed that digital and electronic things can be treated as the third category of personal property, even if they do not fit the two traditional categories of English law.
In practical terms, the UK has created a third category of personal property for assets like crypto-tokens and NFTs. This is not just a “crypto friendly” headline. It is a structural change in how courts can treat digital value when something goes wrong. They can now freeze, trace, and recover digital assets like ANY property, which means there would be no room for the “crypto isn’t real” defense.
From Two Types of Property to Three
For centuries, English law has divided personal property into two groups:
Purely digital assets never sat neatly in either bucket. They are not physical, and they are not classic debt claims either. Courts in the UK had already started to treat some crypto assets as property, but the framework was not fully clear. The Law Commission spent several years examining this gap and recommended a formal “third category” to capture digital things that can be controlled, transferred and used as value.
The new Act follows those recommendations. It states that a thing, including something digital or electronic, is not prevented from being the object of personal property rights only because it is neither a thing in possession nor a thing in action.
That single clarification gives courts a clean legal doorway into digital assets.
India’s Madras High Court and the Global “Crypto Is Property” Shift
The UK is not acting in isolation. In October 2025, the Madras High Court in India held that cryptocurrency qualifies as “property” under Indian law. The court said crypto is an asset that can be owned, enjoyed and even held in trust, and used that reasoning to protect an investor’s frozen XRP holdings on WazirX after a cyberattack.
That judgment gave Indian investors a way to seek relief when exchanges mishandle or freeze assets. It also pushed Indian platforms closer to fiduciary obligations, similar to other financial institutions.
As Tapan Sangal puts it, “Once a court calls your token ‘property’, the question stops being ‘is this real’ and becomes ‘who is responsible when it is lost or misused’.”
The UK Act now pushes this same idea into statute, not just case law, in one of the most influential common law jurisdictions in the world.
Why This Is Infrastructure, Not Symbolism
Property status matters when something breaks.
Once digital assets are clearly recognised as property, courts can apply existing tools to them:
Insolvency: Tokens can be treated as part of an estate, rather than vague “credits” on a platform.
Inheritance and divorce: Digital wallets can be divided or passed on like other assets.
Theft and fraud: Victims can seek tracing, freezing, and recovery orders over misappropriated tokens.
Sanctions and terror financing: Courts can order intermediaries to block or redirect specific digital assets.
The Law Commission has been explicit about this goal. Its reports focus on how to let courts use familiar property and trust law remedies in a technologicaltechnologically neutral way, instead of forcing judges to invent special “crypto rules” for every new case.
This is why many legal commentators call the Act a “quiet revolution”. It turns crypto from a risk into something courts can handle with established tools.
London as the Default Venue for Digital Asset Disputes
The Act also has a jurisdictional angle. English common law influences many countries, and London is already a preferred location for complex financial disputes.
Now that the UK has a clear statutory category for digital property, contracts that involve tokenization, on-chain settlement, custody, tokenization, or on-chain collateral have a strong reason to choose English law and English courts. Industry analyses already suggest that the Act “cements the UK as a leading legal jurisdiction to underpin the digital asset economy.”
Tapan describes it as a power move. “If your token is property under English law, a London judge can use centuries of property and trust principles to decide who really owns it, who failed in their duty, and who must make investors whole.”
For exchanges, custodians and infrastructure providers, that combination of clarity and court power turns London into the natural venue for high value disputes over digital assets.
For Builders, “Property” Also Means Obligation
For builders and custodians, the upside is clear. Property status means:
The other side is less comfortable. If tokens are property, someone is the custodian of that property. Courts can start to treat that person or entity more like a trustee or a bank than a simple technology provider. Losing keys or mismanaging wallets is no longer just a user experience problem. It can become a breach of duty.
Smart contracts that claim to move assets “irreversibly” may face challenges in situations involving fraud, mistakes or unfair conduct. Judges now have explicit permission to ask not only what the code did, but also who should fairly bear the loss, and whether a constructive trust or other proprietary remedy should be imposed.
Sudeep Chatterjee, CEO of STOEX, sums it up well: “This Act moves digital assets from novelty to enforceable property. That is great for serious institutions, but it also means sloppy custody or vague terms of service will not survive their first serious dispute.”
For builders who rely on legal gaps and ambiguity, that is the real message of this week. In common law, gaps rarely stay open for long. English law now governs the world’s most valuable digital assets. It is a sign for them to choose jurisdiction wisely.
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