The United Kingdom on Tuesday formally recognized digital assets as a third category of property while simultaneously preparing legislation that would ban political parties from accepting cryptocurrency donations.
UK Establishes New Legal Status For Digital Assets
The Property (Digital Assets etc.) Act 2025 received Royal Assent from King Charles III, establishing digital assets such as Bitcoin and stablecoins as a legally protected form of property.
The reform creates a distinct category alongside traditional physical and intangible property rights.
CryptoUK, an industry trade association, said the law gives digital assets a clearer legal footing for ownership disputes, fraud cases, and insolvency processes.
Advocacy groups called it one of the most significant changes to English property law in modern history.
The Law Commission first recommended this framework in 2023, and courts had been treating crypto as property through case law.
The new statute codifies that approach and aims to reduce legal uncertainty for businesses and individuals.
UK Prepares Stablecoin Regime As Part Of Broader Digital Asset Strategy
The Bank of England recently opened a consultation on a regulatory regime for sterling-denominated stablecoins.
Deputy Governor Sarah Breeden said last month that the UK intends to keep pace with the United States in establishing rules for digital money and expects the framework to go live quickly.
Regulators describe stablecoins as a significant component of the future payments landscape and say new oversight is needed to support adoption while maintaining financial stability.
Investors can review additional digital-asset coverage through Benzinga's cryptocurrency policy reports.
Government Targets Crypto Political Donations In Election Reform Bill
While the UK strengthened property rights for crypto, the government also plans to prohibit political parties from accepting cryptocurrency donations, according to Protos, which cited officials familiar with the developing legislation.
The measure is expected to appear in a forthcoming Elections Bill.
POLITICO reported that the government did not deny the planned restriction and said further details will be announced once the bill is finalized.
Ministers have raised concerns about the difficulty tracing the origin of cryptocurrency contributions and the risk of foreign interference.
The Guardian noted that the ban will not be ready in time for the next Elections Bill due to the complexity of implementing a compliant verification system.
Reform UK Could Be Most Affected
The proposed ban would directly impact Reform UK, which last year announced it would accept cryptocurrency donations to support its pro-innovation platform.
DonationWatch data shows the party has raised more than $23 million since its launch as the Brexit Party.
Several large donors use digital-asset infrastructure, including Christopher Harborne, a shareholder in Bitfinex and Tether, who has contributed more than $11.5 million.
Reform UK currently uses Radom, a virtual asset service provider registered under EU MiCA rules but not under the UK's Financial Conduct Authority, to process digital contributions.
Critics say these arrangements raise questions about donor verification.
Spotlight on Corruption, an anti-corruption charity, recommended banning crypto donations entirely due to the risk of unverified overseas funding and the use of privacy-focused tokens.
Regulators Cite Transparency And Security Concerns
The charity's submission to lawmakers warned that crypto transactions can obscure funding sources, making it harder for voters to understand who supports political campaigns.
The group also said hostile actors could route large sums through intermediaries or crowdfunding mechanisms.
The group urged lawmakers to require parties to use only FCA-regulated firms should crypto donations remain permitted.
Government officials have expressed concern that tracing the origin of digital assets remains challenging even with blockchain analytics.
These developments come as the UK seeks to modernize election oversight while navigating the rapid expansion of digital finance.
The split policy approach highlights the UK's desire to provide legal certainty for cryptocurrency ownership while tightening controls on its use in political activities.
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