Private law will continue to have an important role to play in the crypto assets market to ensure stakeholders are appropriately protected, according to the Rt Hon Sir Geoffrey Vos, Master of the Rolls and Head of Civil Justice in England and Wales. Speaking on 14 November at ICAEW’s Crypto and Digital Assets Conference, Sir Geoffrey noted that while many traders and investors have played up the apparent novelty of crypto’s lawyer-free status, “that may prove to be illusory”.

Among the 200 systems of private law around the world, only around a dozen, such as those of England and Wales, Japan, New York and Singapore, are widely used to govern commercial transactions, he told delegates at Chartered Accountants’ Hall.

With that in mind, the International Jurisdiction Taskforce (IJT), which Sir Geoffrey chairs, is currently exploring how those systems could align in ways that would remove legal barriers to the adoption of digital assets in global finance and trade.

That project builds on the work of the UK Jurisdiction Taskforce (UKJT), which declared in 2019 that crypto assets can be regarded as property under English law, and smart contracts as legally binding. (UKJT subsequently issued a set of innovative rules for digital assets dispute resolution, also governed by English law.)

In tandem with IJT’s efforts, Sir Geoffrey cited legislation such as the UK Electronic Trade Documents Act of 2023, which allowed digital documents to be treated legally in the same way as paper documents, provided they meet certain simple conditions. He also cited the recent US GENIUS Act, which requires stablecoins to be fully backed by liquid assets, as evidence of how private law is serving as a valuable, shaping force on the market. “Disintermediation – including reduced reliance on lawyers – may be a popular idea,” he said. “But ultimately, people will require some form of legal security for their investments in case things go wrong.”

Joined-up thinking

After Sir Geoffrey championed private law’s ability to provide both operating freedoms and critical safeguards, Lord Kulveer Singh Ranger of Northwood, Co-Chair of the Digital Money and Digital Markets All-Parliamentary Group, called on policymakers to take a more responsive approach to crypto.

As the spearhead of London’s Oyster card system, introduced in 2003, Lord Ranger has extensive experience of how e-money can answer real-world use cases. However, from his vantage point in the Lords’ Science and Technology Committee, he believes that parliamentarians could do much more to drive crypto’s implementation in practical settings.

Following a straw poll that revealed around 50% of delegates have a crypto share, Lord Ranger said: “What you have just demonstrated is that this is not a niche activity. Many people are actively engaged in and using this market. But we haven’t been as quick with our pace in the political and parliamentary environment to keep up.”

For an example of best-practice, joined-up thinking, Lord Ranger cited the Bank of England’s consultation on systemic stablecoins – published just a few days earlier – as “one of the most important financial policy initiatives of this decade”. In Ranger’s view, the paper shows that the UK is finally moving on from talking about digital money to building the frameworks that will make it real. Alongside the need to provide holistic supervision, Ranger said, the consultation recognises that interoperability between new forms of digital money and central bank money “is essential for trust and resilience”.

Lord Ranger stressed: “If we want London and the UK to be a global home for digital finance, we must pair prudence with ambition. We need a regime that is not only safe, scalable and cautious, but also competitive.”

As such, he called for a tiered policy approach. First, the government must make innovation the bedrock of its crypto work. Second, it must expand sandbox initiatives and pilots. And third, it must “open up the pipes” by giving responsible, regulated issuers conditional access to payments infrastructure. “That’s how innovation happens,” he said. “Within systems – not outside them.”

Regaining the initiative

Sir Geoffrey and Lord Ranger then took their seats on a panel on the state of crypto in the UK, chaired by ICAEW Senior Financial Services Regulatory Manager Polly Tsang. Joining them were Tom Duff Gordon,  Vice President, International Policy, at US crypto exchange Coinbase – and, bringing a traditional finance (or ‘TradFi’) perspective, JP Morgan Chase & Co Executive Director Emma Lovett.

Amplifying the thrust of Lord Ranger’s comments, Gordon said that at this point in time, the UK is not leading on crypto. While key territories in the Middle East – along with the governments of Japan, Hong Kong, the EU and, most recently, the US – have fully-fledged regulatory systems in place, the UK lacks much-needed clarity.

In Gordon’s assessment, the GENIUS Act has “triggered an extraordinary amount of energy and innovation” in US digital assets, to the extent that “almost not a day goes by when you don’t hear an announcement about a different group of banks working with stablecoins”. As such, Gordon warned that the next 12 months will be a crucial phase in the development of crypto regulation in the UK and urged stakeholders to account for the industry’s current arc towards the tokenisation of real-world assets.

Signalling her agreement with Gordon, Lovett highlighted UK Finance’s Digital Gilt Instrument (DIGIT) – announced a year ago and currently building towards its pilot stage – as a potential catalyst for the UK to regain the initiative.

“The Hong Kong Monetary Authority has already issued three digital bonds,” Lovett said, “but apart from that, we haven't seen an instrument of this nature in action. So, the UK could be quite leading here, in supporting a different type of digital asset to what we’ve seen on the payments side, with stablecoins and so on.”

Lovett added: “When it comes to thinking about how to utilise DIGIT, perhaps we could start with something quite small. However, if the government were to announce a series of digital gilts that, further down the chain, harness the capabilities of different forms of digital cash, once they've matured, then I think we really do have a chance to start leading.”

Underscoring the importance of a focused, big-picture outlook, Sir Geoffrey said: “At the moment, people are running in all directions and not necessarily aligning their objectives. We need the government, parliamentarians, the law, the Financial Conduct Authority and the Bank of England to all be moving in the same direction.”