Digital Assets (Scotland) Bill: final business and regulatory impact assessment

Background

The Bill will deliver the Programme for Government 25-26 commitment to ‘clarify the status of digital assets as property in Scots private law, to provide greater legal certainty for individuals and for businesses including those investing in digital assets, for technology and financial start-ups, as well as for the legal sector’. Digital assets are intangible items that exist in digital form and can be owned, transferred, or traded using technology. They are typically secured through cryptography, which ensures the integrity and confidentiality of the information contained within the asset. Many digital assets operate on blockchain or distributed ledger technologies, which underpin the operation of cryptoassets and non-fungible tokens (NFTs). The cryptographic foundations of blockchain have significant and far-reaching implications for how individuals and businesses manage assets, interact commercially and conduct their affairs. These technologies are reshaping the way value is exchanged, broadening investment opportunities and lowering barriers to participation in financial and commercial activities.

Scots private law does not readily accommodate digital assets as objects of property, which may create uncertainty for individuals, businesses and investors engaging with digital assets in Scotland. Legal clarification can help to support innovation and enable Scotland to remain an attractive jurisdiction for business.

With a lack of case law in Scotland, the need for legislative reform is more pressing than in some other jurisdictions. The Bill will address this by providing a legal framework for the classification and transfer of digital assets. It will confirm that certain types of digital assets, defined by specific statutory characteristics, can be recognised as objects of property under Scots private law. The Bill will also clarify how ownership of such digital assets can be established and transferred. It will confirm that the general principles of Scots private law will continue to apply to these assets.