The Digital Assets (Scotland) Bill

The Digital Assets (Scotland) Bill: A Foundation, not a Framework

The Digital Assets (Scotland) Bill has now passed, and it represents a genuinely important moment for Scots law. By recognising digital assets as a type of property, the Bill tries to bring clarity to an area where ambiguity has been holding back commercial confidence and innovation. It signals that Scotland intends to keep pace with the realities of a digital economy in which value is increasingly stored, transferred, and disputed in non-traditional forms.

The difficulty with these types of assets is that they are so varied and continually changing that trying to cover every possibility is impossible and new forms of technology and digital assets are constantly developing. If you take the example of NFTs, there was a huge speculative bubble in digital art in recent years which has now come crashing down. NFTs are more commonly being used now as digital tokens representing ownership of physical assets particularly high value luxury items or representing some other right such as membership to a Club. The Bill helps to deal with some of these issues but there are still difficulties particularly where the digital assets are linked to physical ones.

Where the Bill Helps

The Bill's core contribution is conceptual clarity. It confirms that digital assets constitute a distinct category of property under Scots law. It provides some clarity on:

• Recognition of ownership in digital tokens, crypto assets, and other digitally native forms of value.
• Clearer transfer principles, including how control or possession is established in a digital context.
• A more coherent foundation for remedies, particularly in cases involving misappropriation or competing claims.

This aligns Scotland with the broader UK trend following the English Law Commission's work on digital assets and the UKJT's analysis of control-based rights. It also positions Scots law to interact more effectively with tokenisation, smart contracts, and emerging digital markets.

Where the Gaps Remain

The Bill does not attempt to resolve the more complex private-international-law and enforcement issues that practitioners are already grappling with.

• Jurisdiction and applicable law remain unsettled. Digital assets do not have a physical situs, and the Bill does not create one. Without a clear connecting factor, matters such as control, location of the controller, governing law of the platform, or something else which is still to be invented, cross-border disputes risk becoming highly fact-sensitive and unpredictable.
• Enforcement remains a practical challenge. Even if a Scottish court is prepared to grant an order for delivery, preservation, or recovery of a digital asset, the ability to enforce that order depends on identifying the controller, compelling access to private keys, or securing cooperation from intermediaries. None of these issues are addressed in the legislation.
• No guidance is provided on insolvency treatment, custodial duties, or intermediated digital assets. These are areas where commercial disputes are already emerging, and where the law will need to evolve quickly.

A Foundation, not a framework

The Bill is best understood as a structural starting point. It gives us the legal vocabulary and conceptual tools we need, but it does not yet provide the full architecture for dealing with digital assets in contentious or cross-border scenarios. For Scotland to position itself as a leading jurisdiction for digital commerce, the next phase of reform will need to address:

• clarity on the position regarding the jurisdiction of the Scottish Courts in relation to the location of digital assets;
• enforcement mechanisms suited to digital assets;
• the role and regulation of custodians and intermediaries; and
• the treatment of digital assets in insolvency.

The Bill is a hugely important development for Scots law, but it is only the starting point. It will be interesting to see how the Bill is applied in reality by the Courts once the Act comes into force.