Law change to allow damages in Bitcoin

BRITISH courts will have the power to award damages in Bitcoin under new proposals to bring the legal system into the crypto era.

The Law Commission has told the Government English law needs a new category of property to cover crypto assets, including digital currencies such as Bitcoin and non-fungible tokens (NFTS).

“Their unique qualities mean that many digital assets do not fit easily into current private property law categories or definitions,” said the commission.

Lawyers want a new type of legal property called “data objects” to be created, with judges handed the ability to award damages in these tokens. That could see plaintiffs winning Bitcoin or Ethereum damages.

Reforms are needed as current laws are vague about ownership and control of “pure information”, as opposed to tangible real-world property or debts. The collapse of cryptocurrency businesses has also led to pressure for reform from out-of-pocket investors and creditors.

Many often complain that damages paid out in traditional hard currency do not reflect changes in value of cryptocurrencies. Allowing courts to award damages in crypto would save judges from taking a view on the value of the assets, with prices often swinging wildly from one day to the next.

A person who sued over a 100 Bitcoin debt in January would recover just 60pc of its value in pounds today because of the cryptocurrency’s ongoing fall, for example.

Prof Sarah Green, a Law Commissioner, said NFTS and other crypto tokens “have evolved and proliferated at great speed, so it’s vital that our laws are adaptable enough to be able to accommodate them”.

A government spokesman said: “The government will carefully consider any recommendations the Law Commission makes following this consultation.”