Clarity needed on crypto lending regulations — UK Law Commission
A lawyer leading the United Kingdom’s Law Commission’s review on the application of British laws towards digital assets has stressed the need for further clarity around cryptocurrency lending.
Laura Burgoyne unpacked the details of the organization's four major recommendations to the U.K. government in an interview with Cointelegraph. This comes after a lengthy review process of existing legal frameworks in the country and how they’ve been applied to the digital asset sector to date.
As reported by Cointelegraph on July 3, the Law Commission is calling for the creation of a distinct category of personal property for cryptocurrencies and digital assets. In addition, the body recommended the establishment of an industry-specific panel, the creation of a legal framework for crypto-related assets as well as legal reforms to clarify whether the asset class falls under the scope of the U.K.’s Financial Collateral Arrangements Regulations (FCAR).
Burgoyne highlighted the importance of FCAR in allowing traditional finance intermediaries to take security over assets ‘free from a number of restrictions and formalities’ which would traditionally apply.
In the context of finance, security interest gives a legal claim over an asset that a borrower has supplied to a lender in the event that the loanee is unable to meet their repayment obligations. Burgoyne told Cointelegraph the purpose of these provisions is to streamline asset security in the event that an investor defaults on their obligations or becomes insolvent.
Whether cryptocurrencies, digital assets and other tokens can be used as collateral under a qualifying financial collateral arrangement is dependent on whether the assets in question can constitute “cash”, “financial
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