In legal terms, “property” describes any asset over which a person can exert control and from which they can derive some benefit (usually, economic benefit). Put simply, if a person owns property, they can prevent other people from using it or benefitting from it.

The law of England and Wales recognises two types of property:

• Real property. This is property that cannot be moved. Real property is effectively confined to land and objects that are attached to land, such as buildings. (Strictly, as a matter of law, all real property is owned by the Crown. Other persons simply hold an “estate” in real property, giving them a right to occupy and use it. However, in practical terms, this acts as if it were ownership.)
• Personal property. This is often described as a “residual” category. It effectively includes all property other than land and buildings.

Traditionally, personal property has frequently been understood as comprising two sub-categories:

• Things in possession (or choses in possession). These are things that have physical form and which are owned through physical possession. They are typical movable objects, such as goods and stock, furniture, IT equipment, vehicles and personal possessions. A person exercises control over a thing in possession simply by physically keeping it and preventing others from physically using it.
• Things in action (or choses in action). These are assets that do not have physical form (intangible) and can only be enjoyed by asserting legal rights (such as bringing a claim in the courts). Examples include intellectual property, contractual rights, securities (such as company shares) and debts. A person exercises control over a thing in action by utilising the legal framework to disallow others from benefiting from the asset.

For some time, there had been some doubt as to whether digital assets amounted to “property”. Digital assets are intangible and so cannot be things in possession. But, equally, many digital assets, such as digital currencies and non-fungible tokens (NFTs), do not rely on the assertion of legal rights to be recognised and traded and so, arguably, are not things in action either.

In a report in 2023, the Law Commission concluded that, although the law traditionally recognised the two main categories of property described above, this did not preclude the existence of a “third category” of property comprising (among other things) digital assets.

However, to avoid doubt, the Law Commission recommended legislation to clarify this. The Property (Digital Assets etc) Bill is designed to implement this recommendation.