Digital Assets: What You Need to Know in a Changing Legal Landscape

Digital Assets: What You Need to Know

Digital technology is now part of everyday life, and with it comes a new type of property: digital assets. Whether you are investing, running a business or planning for the future, it is increasingly important to understand what these assets are and how to protect them.

What are digital assets?

Put simply, digital assets are items of value that exist only in electronic form. They are usually secure, unique and capable of being owned or transferred.

Examples include:

• Cryptocurrencies such as Bitcoin
• NFTs (non-fungible tokens)
• Tokenised investments
• Rights stored in digital or “smart” contracts

These are different from everyday digital files like emails or PDFs. While those are stored electronically, they do not usually have independent value or ownership in the same way.

Digital assets are becoming more common in a range of situations, including from investments and business transactions to estate planning.

The law is catching up

The law in England and Wales has had to adapt to keep pace with these developments. Traditionally, property fell into two categories: physical items you can possess and legal rights you can enforce. Digital assets did not fit neatly into either.

Recent legal developments have clarified this position by recognising digital assets as a distinct type of property. This is an important step, as it means they can now be more easily protected, transferred and dealt with under the law.

In practical terms, this gives greater reassurance. For example, there may now be clearer routes to take action if digital assets are stolen or accessed without permission, and in some cases, they can be used in financial arrangements.

Risks to be aware of

Despite these improvements, digital assets come with their own challenges.

Because they exist purely online, they can be vulnerable to hacking, fraud or simple loss if access details are misplaced. Unlike a bank account, there is often no central authority to help recover lost assets.

Ownership can also be complicated, particularly where assets are held across different countries or on decentralised systems. Control often depends on access to private keys or passwords. If these are lost, the asset may be lost permanently.

For individuals, digital assets can create difficulties when planning for the future. If they are not properly documented, they may be inaccessible to family members after death.

Practical steps you can take

There are some simple but important steps you can take to protect your digital assets:

• Keep a clear record of what digital assets you own
• Store passwords and private keys securely
• Make sure your will covers your digital assets
• Take legal advice if you are using digital assets in business or investments

Final thoughts

Digital assets are now a normal part of modern wealth. While the law is evolving to provide more clarity, they still require careful handling.

Planning ahead is key. Taking advice early can help ensure your digital assets are protected and can be passed on or used as intended.

If you would like to discuss how to protect your digital assets, particularly as part of your estate planning, please get in touch with our team on 01892 662233 or reception@dwlaw-online.com. 

Written by Verity Fytche - Partner