Meeting of the Parliament 22 January 2026 [Draft]
I am fascinated by Mr Whitfield’s reference to medieval England. Sadly, that did not form part of the committee’s evidence, but I am sure that the convener would be happy to reconvene evidence sessions so that we can take evidence from Mr Whitfield on that particular point. It is an interesting illustration.
I was going to illustrate this quite important point in a different way. Let us say, for example, that the committee’s convener owns extensive wealth in cryptocurrency—I do not know whether that is the case in actuality—and I am an international cybercriminal who manages to hack into his systems and seize control of his cryptocurrency. I then sell it on to, say, the minister, who acquires the cryptocurrency in good faith and pays me value for it. In that case, the minister is deemed to be the true owner, and he acquires good title to the cryptocurrency.
Choosing that approach is not uncontroversial, and some people who gave evidence to the committee feel that that is unfair—in the circumstances of my example, it would be unfair to the committee’s convener, who has been deprived of his asset and done nothing wrong. He has been the victim of a cybercriminal. In theory, the true owner of the property—in this case, the convener—has a claim against me for recovery of his value. However, I am an international cybercriminal hiding behind the worldwide web and I am untraceable, so the true owner has been deprived of his asset and there is no effective remedy.
The reason why the bill takes the approach that it does was explained by Lord Hodge as being a means to ensure that digital assets can be traded and that there is no undue requirement on the purchaser—in this case, the minister—to conduct due diligence as to the validity of the seller’s title. The committee accepted that argument, but we observed that it is a controversial matter and that the definition of good faith is potentially troublesome. We felt that the Scottish Government should keep the issue under review, as it also should the question of a remedy to somebody who has been deprived of their assets unlawfully. The Faculty of Advocates expressed the view that the drafting of the good faith provision is ineffective and that it should be reconsidered.
The committee accepted that the bill is limited in its reach and that there are a number of issues that will need to be considered in the future by the Parliament. One of those is private international law, which is where there is an international dimension to the question of ownership and the law of which country should apply to a transaction between individuals based in different jurisdictions is in question. What should happen when a person dies holding digital assets? What is deemed to be the location of those assets, and what laws of succession should apply? As we have heard, there are also issues around insolvency that have not been resolved in the bill and will be required to be addressed at some future point.
The bill is not the final word when it comes to the legislation on digital assets. It is a useful starting point, and I very much look forward to future bills that we can get into on this important topic. The Scottish Conservatives will be happy to support the bill at stage 1.