A government taskforce has indicated that fund managers may soon be able to use cryptocurrencies such as Bitcoin in their portfolios.
The UK Jurisdiction Taskforce of the LawTech Delivery Panel has backed the use of so-called digital assets, saying they are legally equivalent to property.
It also says that “smart contracts” – pieces of code which underpin crypto-assets and execute transactions at a given point in time – have the same legal validity as any other contract. This could make them akin to using derivatives within an investment portfolio.
Sir Geoffrey Vos, chair of the taskforce and Chancellor of the High Court, said the taskforce’s decision would provide a foundation for the future utilisation of crypto-assets. Vos said the review by the panel was a “watershed” for English law and its analysis of the legal status of crypto-assets is something that no other jurisdiction has attempted.
Speaking at the Guildhall in London this week, Vos said: “The objective, of course, is to provide much-needed marketed confidence and a degree of legal certainty in an area that is critical to the successful development and use of crypto-assets and smart contracts in the global financial services industry and beyond.”
The support of the taskforce could also be a boon for Facebook, which announced plans to launch its own cryptocurrency – Libra – earlier this year. The social media giant had hoped to launch its digital currency in 2020, although there have been a number of setbacks in recent months with high profile names including eBay, Visa and Mastercard dropping out of the project.
Bitcoin shot to popularity in 2017 when the price of a single coin reached almost $20,000 before plunging to around $3,000 by the end of 2018. Today it sits at around $8,000. According to analysis by fund supermarket interactive investor, the cryptocurrency has been the top-performing asset in recent years, delivering a staggering…