Meeting of the Parliament 22 January 2026 [Draft]
Thank you, Presiding Officer. I am delighted that we have such a packed chamber this afternoon to debate this important topic. I emphasise that it is important for many of the reasons that the minister just set out.
Just as the minister expressed his thanks in his speech, I would like to offer mine as well. I thank my fellow committee members. We all agree that this has been an interesting topic, and although we had to get our heads around a great deal of terminology and avoid going down rabbit holes, we all concluded that this was an important piece of legislation. I thank our clerks for their diligent assistance in that work, and I thank everyone who responded to our call for evidence and, indeed, those who provided oral evidence to the committee. I also, somewhat unusually, thank the Scottish Government’s bill team—who are seated at the back of the chamber—for the considerable interest that they took as we gathered evidence. We are very appreciative of that.
I do not intend to cover every recommendation in the committee’s report; instead, I will focus on the purpose of the bill, its definitions and the committee’s key observations.
As the minister pointed out, the Digital Assets (Scotland) Bill is a technical but necessary piece of legislation. It arises from a gap identified by the expert reference group: the need to ensure that Scots law keeps pace with digital technology, given the significant increases in such technology, and because, unlike other jurisdictions, Scotland does not have the body of case law that might enable it to keep pace. Further, the UK Government has legislated in England, Wales and Northern Ireland through the Property (Digital Assets etc) Act 2025, and we do not wish to see gaps emerge between the different jurisdictions in the United Kingdom.
The bill sets out a definition of digital assets, how they are to be treated in Scots law and how they can be acquired and transferred. It is worth taking time to go through that definition. Section 1 defines a digital asset as something that
“arises from an electronic system that makes it rivalrous, and … exists independently from the legal system.”
We spent a bit of time interrogating the concept of rivalrousness, which is clearly understood among the legal community even though it is only now being introduced into Scots law. Critical to the concept of something being rivalrous is the understanding that it is discrete, that it cannot be used more than once and that there is clear control over it. A car or an apple can be rivalrous in that only one person can be in control of the car or consuming the apple at a time. That is unlike electronic things such as PDF and JPEG files, which can be reproduced without the initial person’s consent or awareness.
Another critical element is that, for something to be counted as a digital asset, there must be a reliable and immutable record of transactions that prevents someone else from using or transferring the asset more than once. We debated the nature of immutability and whether, for something to be included, it has to be absolutely immutable or whether, because of the electronic nature of these assets, there is some ambiguity. We want the Government to note that and address it in guidance.
Finally on this point, for something to be considered a digital asset, it must be independent of the legal system, in that it would still exist even if the legal system disappeared. Some witnesses questioned whether anything in Scotland can truly exist independently of the law, but the committee accepts that the bill’s definition provides a workable framework for lawyers and the industry.
A number of witnesses stated that there should be explicit exclusions so that we do not create digital assets inadvertently. Carbon credits are an example that could fall into that category, and we heard that uncertificated securities that are traded through the certificateless registry for electronic share transfer—CREST—system might be excluded for those reasons. The committee recognises that risk and we have called on the Scottish Government to consider whether exclusions are necessary and to lodge amendments at stage 2, as appropriate.
A further area of scrutiny was the treatment of ownership and exclusive control. Section 3 seeks to create a presumption that the person with exclusive control of a digital asset owns it, and section 5 explains that control means being able to initiate, transfer or divest an asset entirely. In that way, the bill classifies digital assets as incorporeal moveable property but treats them like corporeal property for the purposes of acquisition and transfer. We heard that that could be confusing and jarring.
We note the Scottish Government’s explanation that it is necessary to allow concepts such as possession and delivery to operate in a digital context. However, there are practical challenges, such as the fact that some digital assets have shared key arrangements and the fact that someone might have exclusive control of an asset but not own it due to workplace settings or other practical considerations. We note that the bill defines “control” and “exclusive control”, but we draw attention to the evidence that we heard that that might be at odds with what happens in practice. Again, we suggest that clear guidance is important in that area.
The bill seeks to introduce an important departure from traditional Scots law in that it would allow a person who acquires a digital asset in good faith and for value to become its owner even if the seller acted improperly. That is a departure from the long-standing principle that no one can give what they do not have. We heard that protecting good-faith acquirers could undermine consumer confidence in a sector that is already vulnerable to fraud. We have asked the Scottish Government to review protections and remedies to those affected.
I will briefly mention some other critical elements that the committee heard evidence on. There is concern that there has not been greater consideration of the wider environmental impacts that the increasing use of technology can bring about. In addition, there have been calls for the establishment of a separate panel of experts to advise on Scots law and to ensure that there is representation on the United Kingdom jurisdiction task force for Scots law.
We heard about international examples such as Australia, Liechtenstein and the United States, which have a much more specific focus on issues such as tokenisation. We recommend that the Scottish Government maintains a watching brief on such measures and initiatives.
I note that witnesses called for a digital trust strategy to maximise the benefits between academia and industry as technology progresses. We also heard about uncertainties to do with insolvency, debt enforcement and court procedures, as noted by the minister, and using digital assets as loan security. We recommend that the Scottish Government reviews those areas with a view to future reform.
The Economy and Fair Work Committee supports the general principles of the Digital Assets (Scotland) Bill and looks forward to stages 2 and 3, should Parliament approve the bill at decision time today.