The digital tokenisation of non-financial assets: challenges to english private law

Resumo

Digital assets are becoming a fundamental part of the modern economy, raising important debates about their nature and that of the rights that attach to them. The digital tokenisation of non-financial assets poses particular challenges for English private law: whether resulting tokens can be treated as property; whether they are “possessable”; and what is the nature of the link that connects them to the assets they represent. This article examines, in particular, whether token-owners acquire them with the expectation of changing their legal rights in the non-financial assets that underlie them, and whether the law should be amended to address these expectations. Ultimately, it is argued that the existing combination of expectations, market practice, common law and statute is currently insufficient to establish – or recommend the establishment of – a particularly strong link between digital tokens and the non-financial assets they represent. The law should go no further than allowing market participants to establish or strengthen such a link through contract, with any further protection to be provided by regulation.