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- Laura Burgoyne detailed four main recommendations for the British government.
- The team also proposed a legal structure for assets related to cryptocurrency.
According to the lawyer leading the United Kingdom’s Law Commission’s examination of the applicability of British laws to digital currencies, there needs to be greater clarity regarding crypto lending.
In a discussion, Laura Burgoyne provided insight into those four main recommendations for the British government. A comprehensive evaluation was conducted on the country’s legislative frameworks and their relevance to the digital asset sector thus far.
It was previously reported that the Law Commission is pushing for the establishment of a new legal classification, particularly for digital assets and cryptocurrencies.
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Subject to FCAR
The group also recommended a legal structure for crypto-related assets, including the formation of an industry-specific committee and amendments to the law to ascertain whether this asset category is governed by the Financial Collateral Arrangements Regulations (FCAR) in the United Kingdom.
Additionally, Burgoyne highlighted the importance of FCAR, as it permits traditional financial intermediaries to secure assets “without numerous restrictions and formalities” that would typically apply.
Moreover, a security interest, as defined in the financial sector, refers to a lender’s legal entitlement to an asset provided by a borrower in the event of loan default. Burgoyne stated that these provisions are designed to safeguard assets in the case of an investor’s failure or insolvency.
If the assets in question fulfill the criteria of “cash,” “financial instruments,” or “credit claims” under FCARs, they can be utilized as collateral under a qualified financial collateral arrangement. The primary emphasis of the Law Commission’s recommendation was on the application of existing U.K. personal property laws to the judicial processes involving crypto and digital assets.
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