DIFCA announces landmark New Digital Assets Law, New Law of Security and Related Amendments to Select Legislation

Outer Temple Chambers’ digital assets, and banking and finance experts advised the DIFCA on innovative new laws on Digital Assets and secured transactions in September 2023, which have now been enacted.

The new Digital Assets Law is considered to be ground-breaking as it is the first legislative enactment to comprehensively set out the legal characteristics of digital assets as a matter of property law, to provide for how digital assets may be controlled, transferred and dealt with by interested parties and to introduce an impairment regime that addresses the unique characteristics of digital assets.

The new Law of Security is influenced by the UNCITRAL Model of Secured Transactions and significantly enhances DIFC’s securities regime to keep pace with international developments in this field and to ensure DIFC remains at the forefront of best practice and technological developments. As part of this extensive legal reform, the former Financial Collateral Regulations have been repealed and a new chapter concerning financial collateral (which may include digital assets) is contained in the new Law of Security.

In addition, as reflected in Schedule 2 of the Digital Assets law, a large number of other DIFC Laws have been amended, for example:

• The Personal Property Law (bona fide purchase rules);
• Contract Law (to address issues raised by smart contracts, the introduction of a definition of money that particular types of digital assets may satisfy);
• Law of Obligations (electronic trade documents, disapplication of the tort of interference in relation to digital assets);
• Law of Damages and Remedies (action for an agreed sum, rectification and rescission);
• Insolvency Regulations (shortfalls in relation to commingled trust assets, foreign currency conversion provision extended to digital assets that are money);
• ITCUT (provisions governing the passing of title under a sale, protective provisions in relation to unfair arbitration clauses);
• Trusts Law (relaxation of certainty of objects requirement for the creation of a trust to cater for the digital assets context).

Outer Temple’s digital assets and banking and finance specialists Andrew Spink KC, David Russell KC, Nicolas Stallworthy KC, Justina Stewart, Henry Reid, Joshua Cainer, Anson Cheung and Charlotte Elves, alongside Hin Liu from Oxford University drafted the consultation papers and draft laws after months of work.

The proposed new laws and amendments constitute a first-of-its-kind approach to digital assets and secured transactions and reflects Outer Temple’s pre-eminence in the field of digital assets and banking and finance.

News release

To read the proposed laws and amendments, and the news release in September 2023, click here.

To read the latest DIFCA announcement of the enacted laws, click here.

Find out more

To find out more on OTC’s digital assets and banking and finance experts please contact Sam Carter on +44 (0)203 989 6669.

News 14 Mar, 2024