Official Report 387KB pdf
14:20
The next item of business is stage 3 proceedings on the Digital Assets (Scotland) Bill.
In dealing with the amendments, members should have the bill as amended at stage 2—SP bill 75A—the marshalled list and the groupings of amendments. The division bell will sound and proceedings will be suspended for around five minutes for the first division at stage 3. The period of voting for the first division will be 30 seconds. Thereafter, I will allow a voting period of one minute for the first division after a debate.
Members who wish to speak in the debate on any group of amendments should press their request-to-speak button as soon as possible after I call the group.
Section 3—Presumption of ownership
Group 1 is on control in relation to digital assets. Amendment 1, in the name of the minister, is grouped with amendments 2 to 4.
Commercial law of Scotland has developed to reflect the realities of how people use and trade in assets. The amendments in the group seek to do that by adjusting what the bill says about the level of control that someone needs to have over a digital asset to be treated as its presumptive owner and as having physical possession of it. I thank the United Kingdom’s jurisdiction task force for recently sharing with my officials, on an embargoed basis, its draft guidance on control of digital assets. That work, which explores the various arrangements that are used to control digital assets, has informed the thinking behind the amendments.
For commercial and practical reasons, it is common for multiple people to have control over the same digital asset. So-called multisignature arrangements, for example, involve multiple people each being able to use their own private keys to access the digital wallets in which a digital asset is held, and each person can initiate transactions in respect of the asset. The bill, as introduced, refers in various places to a person needing to have exclusive control of a digital asset. That requirement for being exclusive does not comfortably accommodate the reality of multiple people legitimately having control over an asset, so my amendments remove the requirement.
Amendment 1 removes the requirement for control to be exclusive from section 3, which currently says that a person will be presumed to own a digital asset if they have exclusive control over it. Anyone seeking to rebut the presumption that a person with control of a digital asset is its owner will ultimately have to establish a better claim to ownership of the asset. Establishing that the presumptive owner’s control is not exclusive does nothing to prove that someone else is the asset’s true owner, so raising exclusivity in the context of section 3 is therefore a red herring.
Amendment 2 removes the requirement for control to be exclusive from section 4, which provides that the common-law rules about how people come to own physical things apply to digital assets, too. Those rules generally require a person to have possession of a thing to become its owner. The legal concept of possession has both a physical and a mental aspect. The physical element of possession is a problem in relation to digital assets, because they are not physical things, so section 4(1)(b) develops an analogy by stating that exclusive control of a digital asset is to be treated as physical possession of it.
Having further considered the different ways in which digital assets may legitimately be in the control of more than one person and how those scenarios can be mapped on to the law’s approach to physical things, the Government now takes the view that control is the better analogy for physical possession.
That the law does not require exclusive physical possession of a tangible thing to acquire ownership of it can be illustrated by thinking about a parcel being delivered through a letterbox in a two-person household. Once it lands on the doormat, the law would treat both householders as having physical possession of the parcel.
The fact that both people are regarded as having physical possession does not present problems for the law in relation to corporeal moveables, and neither should it in terms of digital assets. The current situation is similar to a digital asset being dropped into a digital wallet to which two people would have access. The law can cope with two people having physical possession of a tangible thing, so it is logical that it would be able to cope with two people having control of a digital asset.
Given how common multiparty control arrangements are, it would be a problem if the law could not cope with them. For both physical things and digital assets, it is the mental aspect that is required for legal possession of a thing that will determine whether one, or both, or none of the people with control of a thing becomes its owner.
Amendments 3 and 4 get rid of the material in section 5 that defines exclusive control and creates a presumption about when someone has it. If amendments 1 and 2 are agreed to, the material in section 5 explaining the concept will, of course, be irrelevant.
I ask members to support the amendments in this group.
I move amendment 1.
Amendment 1 agreed to.
Section 4—Acquisition of ownership
Amendments 2 to 4 moved—[Richard Lochhead]—and agreed to.
That ends consideration of amendments.
As members will be aware, the Presiding Officer is required under standing orders to decide whether, in her view, any provision of the bill relates to a protected subject matter—that is, whether it modifies the electoral system and franchise of Scottish parliamentary elections. In the case of the Digital Assets (Scotland) Bill, in the Presiding Officer’s view, no provision relates to a protected subject matter. Therefore, the bill does not require a supermajority to be passed at stage 3.
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