Property rights evolve to fit commercial realities. Whilst traditionally associated with land and physical objects, value is increasingly being represented in digital form through the proliferation of new technologies.
Whilst such assets - including cryptocurrencies and non-fungible tokens - present significant economic opportunity, they do not fit conventional Scottish legal property frameworks. The Scottish Government has therefore introduced the Digital Assets (Scotland) Bill ("the Bill") to clarify their status under Scots law.
With the Bill entering the final stage of the parliamentary process, we look at how it seeks to confirm that qualifying digital assets are property and - as a result - strengthens the legal foundations that underpin the commercial use of digital assets in Scotland.
Defining "Digital Assets"
So what counts as a digital asset under the Bill?
Rather than listing specific technologies, the Bill outlines characteristics that an asset, and the network it operates on, must feature by design to qualify as property under Scots law:
- Thing arising from an electronic system: A distinct data unit existing on an electronic system. The most common electronic systems - blockchains - operate with distributed ledger technology.
- Rivalrous: The system's architecture must ensure the asset cannot be copied or used by more than one person at the same time. This is achieved by recording changes to unique data codes in a permanent record of transactions and protects against double-spend.
- Independent of legal system: Functions independently on the network and does not exist because of the legal system (compared to personal claims such as bank money), reflecting their decentralised nature.
By defining digital assets through these core characteristics, the Bill provides criteria for granting property status. This seeks to preserve the integrity of Scots property law by excluding those things that can be uncontrollably reproduced (e.g. photo files) or that operate on alterable systems with poor security protocols.
This also guarantees the Bill's longevity amongst rapid technological development, as the accommodating criteria recognises that digital assets are diverse and ensures that appropriate emerging technologies are caught further down the line. But concern remains over the power that this gives developers, and the resulting pressure placed on courts to conduct complex technical analysis.
Nevertheless, from a comparative perspective, this approach is deliberately more prescriptive than its English counterpart (the Property (Digital Assets etc) Act 2025) as, in a smaller jurisdiction such as Scotland, there is generally less opportunity for the courts to immediately develop the law and provide legal certainty.
Innovating Scots Property Law
Defining what qualifies as a digital asset is only the starting point. The real impact of the Bill lies in how those assets are integrated into Scots property law.
Scots law has long distinguished between corporeal property (physical objects) and incorporeal property (legal rights with no physical form). Digital assets sit awkwardly between the two in that they are not physical objects nor legal claims against another party. This uncertainty raised questions about the status of digital assets in Scotland.
The Bill addresses such concerns by classifying digital assets as incorporeal moveable property and provides that the general principles of law are to treat them as such. With this, they will therefore form part of a person's estate and can be protected as property against third parties.
Yet, as digital assets are not assignable contractual rights but independent data units, the Bill adopts an innovative middle ground by clarifying that they are to be regarded as physical property for the purposes of ownership and transfer.
Under the Bill, ownership of digital assets will be linked to exclusive control which mirrors possession of physical property. In practical terms, the person with the exclusive ability to transact with the asset - typically through control of a cryptographic key - is presumed to be the owner, and ownership transfers when that control passes and the change is permanently recorded on the system’s ledger. The level of control is a matter of degree to be assessed on a case-by-case basis.
By allowing them to straddle established spheres of Scots property law, digital assets will benefit from a tailored approach. This policy decision creates a clear and workable framework for holding and transferring digital assets, modernising Scots law without disrupting its foundations. Nevertheless, uncertainty remains as to whether this novel solution will have unintended consequences going forward.
Boosting the Digital Economy
The potential economic impact of the Bill cannot be understated. By confirming that qualifying digital assets are property, their value is secured and market confidence is strengthened to encourage investment into the Scottish digital economy. With that clarity in place, digital assets can be protected in insolvency and used in commercial transactions without lingering doubt about their legal status.
Recognising digital assets as property strengthens the holder’s legal position. Instead of relying only on a contract, they can enforce property remedies against anyone who interferes with the asset. That gives investors and counterparties clearer visibility on risk and how it can be managed, whilst promoting Scotland as a jurisdiction fit for the modern age.
Clear rules on ownership are the foundation of any functioning market. The Bill therefore removes a significant source of uncertainty and creates a more dependable legal environment for businesses operating in this space. In doing so, it enhances Scotland’s ability to attract investment and support growth in digital and technology-driven sectors, ensuring that the law keeps pace with the realities of modern commerce.
Nevertheless, it is vital that this foundational move is reinforced with effective economic strategies to capture the growth potential and attract entrepreneurial activity. Proactive measures are required to springboard the use of innovative technologies which rely on digital asset infrastructure (such as tokenisation and smart contracts) across Scotland's economy . The Bill is therefore merely an initial step in the movement towards the establishment of a mature digital economy.
Co‑authored by Josh Chambers, Trainee Solicitor in our Manufacturing, Media & Technology team, this article was first published in DIGIT - read the original version here.
