‘Locating’ Digital Assets in PIL, Tax Law, Banking Regulation and the Financial Markets

I have already reported on this blog that in 2024 the Law Commission of England and Wales published a call for evidence to help them identify the most challenging and prevalent issues of private international law that arise from the digital, online, and decentralised contexts in which modern digital assets and electronic trade documents are used. I also reported on this blog that later in 2024 the Law Commission published the first result of its call for evidence, an interim document relating to electronic trade documents (ETDs) in private international law.

On 14 January 2025, the Law Commission published the second result of its call for evidence – another interim document on the ‘location’ of digital assets in private international law, tax law, banking regulation and the financial markets. This 35-page document is structured as a ‘Frequently Asked Questions’ to respond directly to the most common concerns raised with the Law Commission so far.

The FAQs answered in the document are:

Q.1. What is the relationship between private international law and other areas of law such as tax law and financial services regulation?
Q.2. How is situs relevant for the purposes of private international law?
Q.2(a) What are the methods and objectives of private international law?
Q.2(b) What policy considerations underpin the private international law situs rules?
Q.3. Can the private international law situs rules be applied in the public law context?
Q.3(a) Can the private international law situs rules be applied in the tax context?
Q.3(b) Can the private international law situs rules be applied in the banking regulation context?
Q.3(c) How do financial services regulation and private international law interact?
Q.4. How does characterisation work in commercial and financial markets use cases of DLT?
Q.4(a) Why is it unhelpful to think in terms of “the law applicable to the digital asset”?
Q.4(b) How might characterisation work in the financial markets?
Q.4(c) How might characterisation work in the context of “linked assets”?

The Law Commission welcomes any follow up questions at conflictoflaws@lawcommission.gov.uk.