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Crypto Lending Regulations: UK Law Commission Seeks Clarity

• The Law Commission is calling for the creation of a distinct category of personal property for cryptocurrencies and digital assets.
• They are also recommending the establishment of an industry-specific panel and a legal framework for crypto-related assets.
• In addition, they are suggesting legal reforms to clarify whether the asset class falls under the scope of the U.K.’s Financial Collateral Arrangements Regulations (FCAR).

Clarity Needed on Crypto Lending Regulations

The United Kingdom’s Law Commission has highlighted the need to clarify whether cryptocurrency lending falls under existing financial collateral regulations. Laura Burgoyne, who is leading the organization’s review of current British laws for digital assets, spoke with Cointelegraph about their four major recommendations to the U.K government.

Establishing a Distinct Category of Personal Property

The Law Commission suggested creating a distinct category of personal property for cryptocurrencies and other digital assets. This would help establish clear guidelines involving ownership and rights associated with it such as storage, transferability and enforceability against third parties in court cases or disputes.

Industry-Specific Panel & Legal Framework

In order to ensure that users have a secure environment in which to hold their digital assets, they have proposed setting up an industry-specific panel and corresponding legal framework that would provide oversight and protection from theft or misuse related to those assets.

Financial Collateral Arrangements Regulations (FCAR)

The recommendation also included clarifying whether cryptocurrencies qualify as “cash”, “financial instruments” or “credit claims” under FCARs—which determine whether an asset can be used as collateral in loan arrangements between lenders and borrowers—in order to streamline security interests when investors default on payments or become insolvent.


Burgoyne stresses that it is necessary to know how FCARs apply to digital asset collateral arrangements in order for there to be smooth operation within the crypto market along with market certainty moving forward.