Property (Digital Assets etc) Bill

Viscount Stansgate Excerpts

Second reading committee
Wednesday 6th November 2024 Grand Committee

[Viscount Stansgate (Lab)]

My Lords, I will say a few words in broad support of the Bill and thank my noble friend the Minister for the way in which he introduced it. This is my first involvement in a Law Commission Bill and the special procedure attached to it. I commend the Law Commission for its work.

I have a few points to raise which I hope will be considered legitimate. I am not a lawyer but, clearly, for many years, many lawyers have reached the view that the law in this area is inadequate when faced with the realities of modern life. It is not the first time that technological developments—in this case, crypto assets, bitcoin, et cetera—have, in effect, overtaken and bypassed the legal system.

Although I do not intend to talk about bitcoin, I ought to say that the points made by the noble Baroness, Lady Bennett of Manor Castle, who has just left her place, about the quantities of energy involved in bitcoin mining, were very well made. About two years ago, I was going down the Columbia River in Washington state when I saw my first server farm—an enormous building next to the river, which generates the water and electricity needed. We will have to face up to the point the noble Baroness made about the sheer quantity of energy involved. As I say, I do not intend to talk about that now, but the point is worth making.

The House spent a long time in the previous Session considering the Online Safety Bill for the same reason—technological developments had overtaken the framework of the law. We are still not sure whether that Act will work and do its job but, on the surface, this new Bill seems to be fairly simple and straightforward, as reflected in the briefing by the House of Lords Library. You could not have a shorter Bill if you tried, as has been said. I suspect, however, that it might have somewhat wider ramifications than we initially realised.

The Law Commission described digital assets as

“increasingly important to modern society”.

I absolutely agree, but the examples given—crypto tokens, cryptocurrency and non-fungible tokens—are not the only ones. I do not know when Members here first came across the idea of a non-fungible token— I did when I went to the Louisiana Museum of Modern Art just north of Copenhagen in Denmark to see a collection of art by David Hockney. They were pictures drawn on iPads and there were 50 of them around the room. David Hockney is of course one of our most famous artists. I found myself looking at these pictures, which were all very lovely, and saying, “If I took that one off the wall and bought it, in what way would that be an original David Hockney?” You could have passed it to any other noble Lord on their iPad.

A non-fungible token derives from the idea that, unlike in the old-fashioned art world where you buy a painting and take it home with you, you need some other way of ascertaining who is the owner of a particular —in this case—artwork. I began to realise that you could not possibly tell what was an original, in the sense that we do about paintings—references have also been made to Word documents in this debate—so the concept of the non-fungible token clearly grew out of that type of experience.

The emphasis in the Bill is clearly on the financial aspects of new digital things, hence the Law Commission’s 2022 Digital Assets consultation paper and its advocacy of

“a third category of personal property beyond things in possession and things in action”

taking form in the Bill. I notice that the House of Lords Library briefing refers to the Law Commission’s final report on the consultation in 2023, saying:

“The final report … concluded it would be best to avoid hard boundaries of what a third category”


is. Can the Minister confirm that it is intended to create or continue the expert panel—that has been suggested or maybe even set up—designed to give a guide in the future on emerging technical and legal issues?

I turn briefly to one of the more personal aspects of the effect of the Bill. I read an article recently about a new type of legal expertise making great strides. I cannot remember what it is called—something like crypto accountants. These specialist lawyers are much in demand in divorce cases where one party, usually the man, is thought to be hiding assets from the other party, usually the woman. I look towards those Members opposite who may have expertise in this direction but it strikes me as being entirely possible that that is happening. I presume that the Bill will help with those

“complex cases where digital holdings are disputed or form part of settlements”.

I hope that the Committee will not mind if I raise an issue that might turn out to be covered by the Bill, which is what you might call our personal digital lives. I am not referring to money, although the sheer scale of the monetary value of digital assets mentioned by the noble Lord, Lord Holmes, is astonishing. Mention has briefly been made of our online life: the records, messages, Zoom calls and the case of the person who died with a digital password unknown to others.

In divorce cases, one often reads about the business of dividing up assets: “Who keeps this? Who keeps that? Who keeps”—this is a very old-fashioned term these days—“the CD collection? And who keeps the photo albums?” In what way will this Bill apply to disputes over things such as digital photos? I have here a mobile phone. A lot of noble Lords have them. They may have large quantities of digital photos on their phones—tens of thousands, in some cases. As I said, we all have them. Will this Bill lead to the courts applying this legislation in some way to whether a phone is a digital asset that can be apportioned in the case of, for example, a divorce?

I read something that interested me the other day. An AI company has apparently set up a digital version of a BBC broadcast with Michael Parkinson, who died a few years ago. In conjunction with his family—at least, with the approval of his eldest son—the company is creating a digital Michael Parkinson, who will be programmed to take part in digital conversations in future with real, alive people. This may seem strange to noble Lords but it looks to me as though this type of thing is coming. What I want to know is, supposing this does happen but part of the family objects to it, if it came to the courts, how might this Bill be applied to decide whether a digital version of a former relative counts as something that can, as an asset, be divided, disputed and so on? I would be interested to know that. I very much doubt that the Minister has anything in his brief relating to it but, nevertheless, I feel it is the type of issue that will arise in terms of the Bill and its potential applications.

I entirely understand the wider international benefits to the UK legal system of this legislation. I hope that it will keep the UK at the forefront of the international legal industry, where we are already recognised as being able to apply the rule of law when so many other jurisdictions around us are not.

Property (Digital Assets etc) Bill [HL]

Viscount Stansgate Excerpts

Report stage
Wednesday 30th April 2025 Lords Chamber

[Viscount Stansgate (Lab)]

My Lords, rather like the noble Lord, Lord Clement-Jones, I am afraid I am also going to disappoint the noble Lord, Lord Holmes, because I do not think these amendments are necessary. But I agree with many of the things he said, especially about the evidence that we received. I had never been a Member of a Special Public Bill Committee before— I do not know how many of your Lordships in the Chamber tonight have been—but it is really a very interesting procedure. When I consider the length of the Bill compared with the height of the amount of evidence that we received both in writing and orally, I do not think I have ever seen such a strong proportion of that kind.

I want to say one thing about Amendment 4 and data centres. I agree that this is not really within the remit of the Bill. If it was not for the noble Lord tabling all these amendments, we would not have had a Report debate of any kind, so I thank him for that too. The House is beginning to understand, I think, that data centres use phenomenal quantities of electricity —it is staggering. I do not know how the future is going to unfold but when the noble Lord refers to them as the “foundries” of the 21st-century economy, I think he makes a very good point.

I am a member of the UK Engagement with Space Committee of your Lordships’ House and one of the many interesting things that is beginning to emerge there is that in the future data centres may be placed in space—where, incidentally, it is easier to keep them cool—and then you would send the data to and from. I agree that this goes much more widely than the debate on the Bill.

I conclude by saying that when the noble Lord says the world is watching, I agree with that too, because the Bill will allow common law to develop in the way that common law has done for decades. It will also entrench the central position of London as a jurisdiction for the arbitration of disputes and arguments about digital assets, and I think and hope that London will continue to do that. Therefore, there is that element to the Bill, which I strongly support, although I am in favour of the noble Lord withdrawing his amendment.

[Lord Clement-Jones (LD)]

My Lords, I can be extremely brief because I agree with much of what the noble Viscount, Lord Stansgate, has had to say. The noble Lord, Lord Holmes, is nothing if not consistent. We had data centres brought up in the Data (Use and Access) Bill and in this Bill, and I am sure he will ruthlessly bring up data centres on every possible occasion. Of course, the Government need a data centre strategy but the primary purpose of this Bill is very specific: to resolve the Colonial Bank v Whinney issue that the Law Commission wished to do. That is what we should be focused on today.

The Bill does not make digital assets property. It removes a legal barrier to their recognition as such by confirming that the traditional twofold classification is not exhaustive. That is all the Bill does, so I think that requiring a comprehensive economic impact assessment does not flow directly from this very narrow but useful Bill. I feel the same way about Amendment 5, which proposes a review within six months. Again, that goes way too far. Framing the review as being triggered

“due to any such digital assets being treated as property by virtue of this Act”

suggests that the Bill creates the property status, which is misleading.

I think the noble Lord, Lord Holmes, already knows all the arguments against his amendments so I shall carry on no further.

--- Later in debate ---

[Viscount Stansgate (Lab)]

My Lords, it is a pleasure to follow the noble Lord, Lord Holmes, and agree with his amendment. My only regret is that I did not sign it, because you can have four names on an amendment and, if I had another life, I would have immediately put my name to it. I echo his comments about the noble Lord, Lord Anderson of Ipswich, who was a wonderful chair of this Special Public Bill Committee. I may never sit on another such committee—who knows?—but it was an enjoyable and interesting experience. To match up the Long Title with what is called the operative clause in the Bill is a good and sensible thing. Apart from anything else, the Bill replaces an obscure late-19th century judgment of which I confess I had never heard before I went into the committee, but it is a Bill for the future and, with that, I wish it well.

[Lord Clement-Jones (LD)]

My Lords, I, too, add to our congratulations to the noble Lord, Lord Anderson, who was a very good chair. It was a very harmonious committee, as these Law Commission Committees tend to be. I am delighted to support the noble Lord, Lord Holmes, for a change, but it is very lucky we did not pass Amendment 1, that is all I can say.