UK needs specific laws for using cryptocurrency as collateral, according to Law Commission.

The Law Commission, funded by the Ministry of Justice, has recommended that the United Kingdom creates a specific framework for using cryptocurrency as collateral. This would go beyond the current regulations for traditional finance. The Commission has also suggested that the UK government should treat crypto assets as a new type of property and establish a panel of industry-specific experts to advise courts on legal issues related to digital assets. The report is the result of the first ever government-commissioned analysis in the UK on how existing legal frameworks can accommodate crypto and non-fungible tokens. The Commission has recommended a bespoke statutory legal framework for certain crypto collateral arrangements, which would need to be tailored to the way crypto works. The Commission’s proposals do not apply in Scotland or Northern Ireland, which have their own legal systems. The Commission’s recommendations align with the UK government’s plans to turn the country into a hub for digital assets.