A lender takes tokens as collateral. Months later the borrower defaults, or the custodian holding the tokens fails, or someone claims the tokens were taken from them before the borrower ever had them. Each dispute turns on one question, whether a token is property, and a second that follows it: whose claim ranks first? Two legal systems now answer parts of that, and different parts. The United States has a rule book for priority. England and Wales has a statement of status. Reading them as equivalent is a mistake.

Why the category decides so much

The Law Commission of England and Wales noted in 2023 that property rights are "good against the whole world", whereas other personal rights are good only against someone who has assumed a duty. That separates three outcomes. In an insolvency, it separates an owner who takes assets back from a creditor who queues. In secured lending, it decides whether a lender can hold an interest that beats other claimants. On a sale, it decides whether the buyer takes clean title or inherits someone else's claim.

The two jurisdictions started from different problems. English law had to decide whether a thing that is neither tangible nor a claim enforceable in court could be owned at all. American commercial law had to say how a lender perfects an interest in something with no paper and no possession.

The United States: Article 12 and control

What the 2022 amendments say

The Uniform Law Commission approved the amendments at its July 2022 annual meeting, drafted in partnership with the American Law Institute. The text is a model that binds nobody until a state legislature enacts it. It adds a new Article 12 to the Uniform Commercial Code and amends Article 9, which governs secured transactions.

A "controllable electronic record" is a record stored in an electronic medium that can be subjected to control. The definition excludes deposit accounts, electronic money, transferable records and investment property, so tokens held as securities entitlements through an intermediary sit under Article 8 instead.

Control, in section 12-105, has three parts. The person must have the power to avail itself of substantially all the benefit of the record. It must have exclusive power to prevent others doing the same and to transfer control. And it must be able readily to identify itself as holding those powers, "including by name, identifying number, cryptographic key, office, or account number". A power can stay exclusive though shared, but not where the holder can act only together with the transferor or with someone who can act alone. A lender who can move collateral only with the borrower's co-signature does not have control on that reading of the text.

Four rules follow.

  • A security interest in a controllable electronic record can be perfected by filing or by control.
  • A secured party with control has priority over one that does not have control (section 9-326A).
  • Filing a financing statement is not notice of a property claim in the record (section 12-104(h)).
  • A "qualifying purchaser", meaning one who obtains control for value, in good faith and without notice of a property claim, takes free of that claim (section 12-104(e)). Later purchasers take whatever rights that purchaser had, under a shelter rule.

Where it applies

One law firm counted 25 states plus the District of Columbia by 14 October 2024. New York's governor signed the amendments on 5 December 2025, as chapter 579 of the Laws of 2025, and commentary at the time counted New York as the 33rd jurisdiction. The Uniform Law Commission's enactment tracker is the authoritative list, so treat 33 as a December 2025 count and check the tracker for any given state.

New York's amendments took effect in June 2026, six months after signature. Cleary Gottlieb, Cadwalader and Manatt date it 3 June; Alston & Bird gave 5 June. Certain secured-transactions provisions carry a longer transition, which runs to June 2027.

Which state's law applies is separate. Under sections 12-107 and 9-306B, it is that of the record's "jurisdiction", fixed first by what the record says, then by the published rules of its system, and failing those, the District of Columbia. Perfection by filing follows the debtor's location.

England and Wales: the 2025 Act

What it says

The Property (Digital Assets etc) Act 2025 received Royal Assent on 2 December 2025 and came into force that day. It extends to England and Wales and Northern Ireland, not Scotland. It has two sections. Section 1 reads:

A thing (including a thing that is digital or electronic in nature) is not prevented from being the object of personal property rights merely because it is neither (a) a thing in possession, nor (b) a thing in action.

That is the whole operative text. It does not define a digital asset or say any particular token is property. It says nothing on transfer, priority, collateral or choice of law.

It grew from the Law Commission's project: a consultation paper in July 2022, a final report in June 2023, and a supplemental report with a draft Bill in July 2024. The final report concluded that the law "is now relatively certain". The supplemental report cites decisions including AA v Persons Unknown and LMN v Bitflyer Holdings Inc among those treating crypto-tokens as property, and records that the Court of Appeal has said "a cryptoasset such as bitcoin is property". Legislation was recommended because consultees, including senior and specialist judges, said it would help to confirm the common law position, not because the common law had failed.

What it leaves to the courts

The Law Commission chose not to define the "third category" in statute. It described indicia instead, chiefly that the thing exists independently of persons and of the legal system, and is rivalrous. It concluded that crypto-tokens fall within the category, and gave digital files, as currently designed, as an example of something that does not. Other boundary cases, from in-game assets to carbon credits, are left to the common law, and the Act does not change that.

Being a third-category thing has consequences the Act leaves untouched. Conversion, the tort of interfering with goods, applies only to things in possession, so it is unavailable. The Law Commission's view was that such things count as "property" for the Insolvency Act 1986, but that they should not be presumed to be "goods" under the Sale of Goods Act 1979. Those are the Commission's views on its draft Bill, not court rulings. It expected the presumption against retrospective effect to apply, and the enacted text has no retrospective provision.

What changes in practice

Secured lending

In an enacting state a lender has a defined route: obtain control, or use a custodian that acknowledges control on its behalf (section 12-105(e)), and rank ahead of a lender without control. A custodian that gives that acknowledgment owes the lender no duty unless it agrees otherwise or other law provides one. Manatt's advice is that loan documents should therefore specify the control mechanics, including signer roles and approval policies. On how collateral moves once pledged, see our note on tokenised collateral.

In England and Wales the Act does not build a collateral regime. The Law Commission said in 2023 that title-transfer and non-possessory security work without reform, that possessory security does not apply to crypto-tokens, and that many crypto-tokens are likely to fall outside the Financial Collateral Arrangements (No 2) Regulations 2003. It called the available options "not adequate" and recommended that the Government, as a matter of priority, set up a project for a bespoke statutory framework. The Act is not that framework, and none of the sources reviewed for this piece shows one has been enacted.

Custody and insolvency

Article 12 does not decide what a custody contract says. Whether a customer is an owner or an unsecured creditor still depends on the terms and the structure, which our piece on custody sets out. The same is true in England: the Law Commission found that trusts can support custody, including pooled holdings, but concluded that a presumption of trust is neither necessary nor appropriate, and that insolvency reform for custodians needs more assessment. The Act confirms a token can be owned. It does not make a customer's claim against a failed custodian proprietary.

Clean title

The two systems diverge here. Article 12 gives a statutory take-free rule for a qualifying purchaser. The Law Commission agreed that English law should have a good-faith-purchaser defence for crypto-tokens, but concluded that, without a statutory definition of the category, a general statutory rule was precluded. It left the defence to the courts to develop. That matters to anyone tracing stolen assets, a subject covered in our post on recovery, because a buyer protected by statute in an enacting US state has no settled English equivalent to rely on.

What the UNIDROIT Principles add

The UNIDROIT Principles on Digital Assets and Private Law were adopted by its Governing Council on 10–12 May 2023 and published on 4 October 2023. They are not a treaty. They recommend that states legislate consistently with them, and they leave many issues to other law, such as whether a transfer was valid.

Their value is a shared vocabulary. A "digital asset" is an electronic record capable of being subject to control, and control closely tracks the Article 12 test. An innocent acquirer with control, meeting further conditions, takes free of proprietary claims (Principle 8). Control makes a security right effective against third parties, including where a custodian holds the asset for the creditor (Principle 15), and a security right made effective by control outranks one made effective only by other means, such as registration (Principle 16). Principle 13 says assets a custodian holds for clients are not available to its creditors. A shortfall in an undivided pool is shared pro rata, and the rule that the custodian's own holdings absorb it first is optional for states. Under Principle 19, proprietary rights effective against third parties are generally effective against an insolvency representative.

On applicable law, Principle 5 lets the asset itself, or failing that its system, specify the governing law, the same idea as section 12-107. The foreword concedes that no specific private law rules had emerged anywhere as the better solution, so the work was an attempt to create a standard, not to codify one. The English Act has no matching provision.

What is still untested

None of the sources reviewed for this piece reports a court decision applying Article 12. New York's amendments took effect in June 2026, and Manatt's May 2026 note put it this way: "The doctrine will be written in the closings and the workouts." The open question it identifies is on-chain collateral held in smart contracts, where it is unclear whether protocol-mediated control, through governance rights or contract-level controls, meets the statutory test. It advises lenders to assume such collateral needs a custodian to be perfected by control. The sources reviewed do not say how control-based priority fares in a US bankruptcy.

In England, the Law Commission counted, by July 2024, at least 26 first-instance decisions affirming or implying that crypto-tokens are property, most of them decided in connection with interim relief. The boundaries of the third category are for judges, case by case. The Law Commission set out two opposing views of what a transfer does, extinguishing one object and creating another or moving a persistent one, and the Act settles neither. The collateral regime and custodian insolvency reform remain recommendations. The Act has no choice-of-law rule, and in July 2024 the Commission was running the question of which court and which law as a separate project.

A token being property tells you it can be owned. It does not tell you who ranks first, who is protected when a custodian fails, or which law decides. This is information, not legal advice on any structure.