Digital assets in Scots private law: Consultation - Scottish Government analysis

1. The Consultation Exercise

1.1. Why did we consult?

Scotland is a well-established, globally competitive financial services hub and the UK’s second financial centre after London, employing over 140,000 people. The Scottish industry is known for specialism in areas including asset management, banking, savings and pensions, with emerging areas of strength such as fintech, artificial intelligence and green finance driving innovation and growth.

Scotland also has an independent legal system, distinct from the other UK jurisdictions. Our laws need to be fit for purpose, so it is important that Scots private law supports and keeps pace with developments in innovation and financial technology. In some instances, there is a need for legislative change to achieve reform, and this is true of digital assets.

Digital assets are transforming the financial sector and present new economic opportunities; however, their legal status as property under Scots law requires greater clarity. The Scottish Government appointed an Expert Reference Group (“ERG”) to review the existing legal framework and to advise if legislative change was necessary. The ERG formed the view that reform of Scots private law would be beneficial and provided several recommendations on how this could best be achieved.

1.2. What did the consultation ask?

The consultation was intentionally focused to capture a range of views on the ERG’s recommendations and to identify to what extent potential reform is supported. Views were invited on whether primary legislation is the most effective way to resolve uncertainty about the status of digital assets in Scots private law. The relevant questions are in Section 4.1 – Primary Legislation of this analysis.

Section 4.2 – Classification of Digital Assets as Property examines how digital assets could be legally recognised in Scots private law. It explores whether they should be classified as incorporeal moveable things and whether any statutory definition of digital assets should be technologically neutral. It also considers whether “independent existence” and “rivalrous nature” should be statutory criteria for defining digital assets.

Section 4.3 – Ownership of Digital Assets focuses on the legal framework for digital asset ownership and for the transfer of ownership over a digital asset. It considers whether control should be the primary basis for establishing ownership of a digital asset and what rules should govern the voluntary transfer of ownership. It also examines whether ownership should transfer to a person who acquires control of a digital asset in good faith and for onerous consideration from a transferor who is not the owner of the digital asset.

Section 4.4 – Preservation of General Principles explores whether any possible future primary legislation should make express provision confirming that the existing principles of Scots private law continue to apply to digital assets, so far as those principles are consistent with the characteristics of those assets. It considers whether any possible future primary legislation should make express provision to clarify that digital assets which qualify as property are capable of being held in trust and what additional legislative provisions, if any, should be introduced, provided that these would be within the legislative competence of the Scottish Parliament.

1.3. How did we consult?

We invited responses to this public consultation from 27 November 2024 until 5 February 2025. Responses could be submitted via the Scottish Government’s consultation hub, Citizen Space, or by email or mail. In addition to the written consultation, the Scottish Government hosted a series of meetings and roundtables in Aberdeen, Edinburgh and London to seek views on the main proposals. Discussion on the feedback obtained can be found in Section 4.5 – Stakeholders Discussions.