The U.K. Jurisdiction Taskforce has published a consultation on the issuance and transfer of "digital securities" under English law. Digital securities are shares, bonds and other debt securities which are constituted by reference to a blockchain or distributed ledger. English law is commonly used as the governing law of choice for conventional debt securities in international markets, but a question arises as to whether English law can support the issuance and transfer of digital securities. The UKJT intends to publish a legal statement on the subject in December 2022.
The consultation paper seeks input on a range of questions to inform the legal statement, including whether digital securities can be validly issued using blockchain or DLT under English law, the form that such digital securities could take and the mechanism by which such securities could be transferred. The consultation also covers questions on the stapling of rights to digital securities and corporate requirements that U.K. companies must comply with when issuing and transferring digital assets.
Responses to the consultation should be submitted by September 23, 2022. A public event will be held on September 14, 2022 to receive in-person feedback to the consultation.
In 2019, the UKJT published a legal statement on cryptoassets and smart contracts, which sets out when a cryptoasset will be considered to be property and a smart contract will be considered an enforceable contract. It also published the Digital Dispute Resolution Rules in April 2021, which establish an arbitration regime for settling disputes related to cryptoassets, smart contracts or any novel digital technologies.