Historically, English law recognised two categories of personal property, as things in possession and things in action. The Act confirms that certain digital assets can fall into a distinct third category, adopting a principles-based test rather than a standard statutory definition.

Digital assets may qualify where they are:

• definable and identifiable;
• transferable;
• subject to exclusive control;
• sufficiently permanent and rivalrous.

Judicial Foundations

The courts have demonstrated a willingness to recognise digital assets through case law.

In AA v Persons Unknown [2019] EWHC 3556 (Comm), the court allowed Bitcoin to be constituted as property, following a ransomware attack. Subsequently, confirming that the digital assets were capable of being the subject of proprietary protection. Later, Ion Science Ltd v Persons Unknown [2020] followed a similar positioning. In this case, the High Court granted asset injunctions and disclosure obligations in respect to misappropriated digital assets.

Further, the court’s decision in Dasisz v Persons Unknown & Huobi Global Ltd [2022] permitted the issuance of interim injunctions and a disclosure order against a cryptocurrency exchange to facilitate the recovery of stolen assets. The legal framework was trending toward the acceptance of digital assets, but the Act sought to resolve lingering ambiguity about their classification and reduce transaction friction.

What Does this Mean for Lenders?

For lenders, the Act removes any doubt that digital assets that qualify under the above criterion can be used as collateral in structured lending arrangements and confirms the availability of established proprietary remedies, such as injunctive relief, tracing, and freezing orders. As a result, lenders have access to more robust collateral structuring and can rely on greater confidence in the enforceability of security packages.

However, despite the act’s promise, it is important to manage lender expectations. The act does not include a bespoke security regime for digital assets, nor does it resolve practical issues surrounding custody, control and insolvency priority.

Control and Custody

Importantly, recognising digital assets as property does not eliminate all prior risks. Therefore, effective enforcement will depend on control of the private keys and reliable custody arrangements. When digital assets are not properly segregated or subject to contractual claims, lenders may face tracing complexities or fall behind proprietary claims of other stakeholders.

Although ownership does not necessarily terminate if private keys are lost, it can complicate enforcement. To address this concern, institutional lending structures should implement safeguards, such as reliance on third-party custodians, multi-signature arrangements, contractual control mechanisms, or segregation of controls.

For instance, when a borrower retains the practical ability to deal with tokens despite insufficient control, a charge described as “fixed” may shift to “floating”. The distinction is important in insolvency proceedings, as floating charges rank lower in priority, possibly undermining recovery status. To summarise, the court prefers to examine the degree of practical control retained by the chargor, not simply the label applied in the security document.

Subsequently, a floating charge holder ranks behind preferential creditors and becomes an unsecured creditor. Additionally, administrators may also exercise wider powers over floating charge assets. Therefore, insufficient control regarding digital asset collateral may result in reduced recoveries.

Insolvency and Asset Segregation

Recent UK exchange insolvencies, including Re Bittrex Global (UK) Ltd [2025], illustrate the significance of correctly characterising customer holdings, as evidenced by litigation over who was entitled to the company’s remaining currency stored on its blockchain.

Asset segregation can determine if an asset falls within a trust or estate. Therefore, priority outcomes in insolvency proceedings influence whether customers recover in full or rank as unsecured creditors. For secured lenders, this means the status of priority depends on the proper structure of custody and drafting of the relevant charge.

While the Act clarifies the status of digital property, it does not yet automatically provide relief mechanisms to aid in determining priority in disputes. In practice, lenders should consider structure, segregation and enforceability at the outset to ensure best practices and safeguards will hold.

Conclusion

Property recognition is only the catalyst for further legal subtleties around digital assets. In practice, digital assets used as collateral will face the question of recoverability, which depends on control architecture, custody arrangements, and priority standing. As digital asset lending becomes increasingly institutionalised, lenders should review custody and control frameworks designed to ensure that property recognition translates into practical ability to use their digital holdings and attain proper security through recoverability.

The post Digital Assets as Collateral: What the Property (Digital Assets, etc.) Act 2025 Means for Lenders appeared first on Stephen Ailwood Legal.

The VASP Act provides regulatory clarity on virtual assets. It directly addresses the Financial Action Task Force (“FATF”) recommendations to Kenya for a clear legal framework for virtual assets. As seen in jurisdictions such as Dubai and South Africa, formalising the virtual asset ecosystem is likely to unlock more investment flows and promote access to a broader range of financial and capital markets services in Kenya. Additionally, the enactment of the VASP Act will support Kenya’s efforts to be removed from the FATF grey list.

The VASP Act requires every person offering virtual asset services in Kenya to be licensed. It designates the Capital Markets Authority (CMA) and Central Bank of Kenya (CBK) as the primary regulators of virtual asset activities in Kenya.

The VASP Act regulates entities offering the following services in Kenya:

• Virtual asset wallet providers who provide custodial wallets or services.
• Virtual asset exchanges that facilitate the (i) transfer and conversion services of one or more virtual assets or between virtual assets and fiat currency or (ii) sale, trade, or exchange of virtual assets for fiat currencies or for other virtual assets.
• Virtual asset payment gateway processors who arrange transactions involving virtual assets and fiat currency or between virtual assets.
• Virtual asset brokers who provide brokerage services to facilitate the exchange between one or more forms of virtual assets through virtual asset exchanges and virtual asset wallet providers on behalf of clients.
• Virtual assets investment advisors who provide investment advisory services on virtual assets, initial virtual asset offerings, and non-fungible tokens on behalf of clients.
• Virtual asset managers who manage virtual asset portfolios in accordance with mandates given by clients on a discretionary basis where such portfolios include one or more virtual assets.
• Virtual asset offering providers who issue and sell virtual assets to the public. This includes initial coin offerings, tokenisation of virtual assets and issuance of stablecoins.
• All licensed entities must be incorporated in Kenya and will be subject to mandatory ongoing compliance requirements.

While the VASP Act provides a clear path forward, we are cautiously optimistic about its implementation. The VASP Act requires the Cabinet Secretary for the National Treasury, in consultation with the designated regulators, to issue detailed regulations that will specify the licensing, capital, and ongoing compliance requirements for virtual asset service providers (VASPs) and issuers of virtual assets. Moreover, we expect the CMA and the CBK to issue guidance notes to traditional financial institutions that intend to offer virtual asset services, whether through existing licensed entities, subsidiaries or in partnership with VASPs.

Furthermore, the VASP Act is the foundational legal pillar of the National Policy on Virtual Assets and Virtual Asset Service Providers, 2024. The national policy includes other interventions that the government must fully implement for the ecosystem to thrive. These interventions include the promotion of financial literacy, fostering innovation, and building supervisory capacity.

Drawing from our experience with digital credit provider licence applications, obtaining regulatory approvals in Kenya within stipulated timelines is becoming increasingly challenging. This can be attributed to various factors, including a shortage of staff to review the high volume of applications.

Prospective VASPs and issuers of virtual assets should prepare for a potentially lengthy approval process. In addition to the capacity issues we have highlighted above, other factors that might cause delays include the unique nature of virtual assets and the cautious approach previously taken by the CMA and CBK regarding them.

In anticipation of this challenge, we recommend that applicants for VASP licences and for initial virtual asset offerings prepare comprehensive, high-quality applications. Applicants must assure the regulators of their commitment to supporting Kenya in combating illicit financial activities, including money laundering, terrorism financing and proliferation financing. They must demonstrate adequate internal controls, governance structures, and robust processes for cybersecurity and consumer protection.

Our team has practical experience in the virtual asset space, having advised clients locally and globally on innovative projects involving cross-border virtual assets, microlending, and payment transactions. We remain available to provide legal support and offer practical insights in this area.

The information provided in this article is for general informational purposes only and does not constitute financial, investment, or legal advice. It is not, and does not aim to be, comprehensive. Given the general nature of its content, it should not be considered legal advice. For specific advice, please contact Peter Mwaura in our Kenya office.

The post Kenya Enacts Virtual Assets Law appeared first on Stephen Ailwood Legal.

Announced as part of a “week of action” beginning 2 June, the FCA has made three arrests, sent cease and desist letters to seven individuals, and issued over 650 take-down requests for social media content deemed to be promoting unauthorised investments, including crypto assets. These efforts align with the UK’s new Online Safety Act, which expands the FCA’s ability to monitor and respond to harmful financial content online.

The crackdown sends a clear message: promoting financial products online now falls squarely under regulatory scrutiny, especially when influencers lack the necessary FCA authorisation.

Financial Services Partner Karl Foster commented on the regulatory shift.

“Regulators are increasingly scrutinising finfluencers as social media’s influence grows, particularly among younger audiences. Many promoting ‘get-rich-quick’ strategies unknowingly cross into regulated investment advice—a criminal offence in the UK punishable by fines or up to two years’ imprisonment. Social media’s unregulated nature heightens risks of scams and misinformation, leaving regulators reliant on platforms’ cooperation for enforcement. The FCA’s statutory duty to protect consumers and market integrity justifies this crackdown, which aligns with its broader goals—such as curbing high-risk investments by inexperienced investors. Recent global actions, like India’s ban on finfluencer Asmita Patel, underscore the need for international regulatory coordination, especially as decentralized finance (DeFi) expands. However, as the Treasury Committee has highlighted, delayed responses from platforms like Meta to takedown requests remain a hurdle.”

The FCA’s warning list continues to grow, now including dozens of unregistered crypto platforms and, more recently, three high-profile “crypto finfluencers.”

While the Online Safety Act is designed primarily to regulate digital platforms, its impact is being felt across financial services. According to the FCA, the Act has given the regulator new tools to ensure that fraudulent promotions can be flagged and removed more effectively.

The FCA’s crackdown shows online promotion of financial products must meet the same regulatory standards as traditional advertising channels. For firms and individuals alike, compliance is no longer optional – especially in the fast-moving digital investment space.

Karl was featured by the outlets below:

CCN News

BBN Times

Business & Accountancy Daily

Introducer Today

The information provided in this article is for general informational purposes only and does not constitute financial, investment, or legal advice.

The post FCA Targets Finfluencers in Global Crackdown appeared first on Stephen Ailwood Legal.

Registration

As is widely known, the VASP Act initially introduced a registration regime with effect from 31 October 2020 for any person conducting a “virtual asset service” in the course of a business using a Cayman Islands entity or otherwise from within the Cayman Islands (a “VASP”). A “virtual asset service” means the issuance of virtual assets or the business of providing one or more of the following services or operations for or on behalf of another person: (a) the exchange between virtual assets and fiat currencies, (b) the exchange between one or more other forms of convertible virtual assets, (c) the transfer of virtual assets, (d) virtual asset custody service, or (e) participation in, and provision of, financial services related to a virtual asset issuance or the sale of a virtual asset.

New Licensing Regime

As of 1 April 2025, virtual asset custody providers and trading platform operators must now obtain a license. There is however a transitional period of ninety (90) days from 1 April 2025 within which an existing VASP performing a licensable activity under the VASP Act must submit its license application to CIMA. An entity that performs activities that require a registration and a license under the VASP Act will only require a license.

The new licensing regime of the VASP Act introduces various additional requirements on virtual asset custody providers and trading platform operators, including additional prudential requirements, segregation of client assets from proprietary assets and enhanced disclosure requirements to clients (including internal safeguards, insurance arrangements and grievance procedures). In addition, all applicants must submit cybersecurity plans, risk management strategies, and details on how they intend to prevent asset loss or theft.

Director Requirements

Irrespective of whether it is registered or licensed under the VASP Act, a VASP is now also required to appoint at least three (3) “fit and proper” directors. This must include at least one (1) independent director without a vested interest in the VASP.

Audited Accounts

Keeping to the risk-based approach to regulation that is adopted in relation to VASPs, the VASP Act does not, by default, specify that a VASP must audit in its annual accounts. However, CIMA now has the discretion to require a VASP to provide audited financial statements if it determines that is necessary due to the nature, size and/or complexity of the business, or where it has reasonable grounds for believing that the VASP has provided false or misleading accounts.

Waivers

In limited circumstances, CIMA may now grant a waiver to a person or an entity with respect to the requirement to be registered or licensed under the VASP Act. For example, if a person is licensed under another regulatory law in the Cayman Islands (such as the Securities Investment Business Act (As Revised)), CIMA may grant such a waiver where it determines that: (a) the virtual asset service does not materially change the nature of the activity for which the person is licensed, and (b) the supervision and oversight that is carried out in relation to the business of the existing licensed person is sufficient to include the virtual asset service.

Next Steps

If you want to know more about the content of this article, please contact Peter Vas.

This article first appeared in the May 2025 issue of the Hong Kong Lawyer, the official journal of The Law Society of Hong Kong.

Disclaimer: The information provided in this article is for general informational purposes only and does not constitute financial, investment, or legal advice. You should seek professional advice before taking any action in relation to the matters dealt with in this publication. This article was last updated on 13 May 2025.

The post Key changes to the regulatory framework for digital assets in the Cayman Islands appeared first on Stephen Ailwood Legal.

Background

Despite regulatory uncertainty, virtual asset activities have grown significantly in Kenya. A recent International Monetary Fund (IMF) report noted that when Kenya faced a US Dollar shortage, many Kenyans turned to stablecoins to settle international payments.[1] The same IMF report indicated that Kenyans used stablecoins to hedge against the volatile Kenya Shilling.[2]

The absence of a clear regulatory framework to monitor and regulate the increased use of virtual assets contributed to the grey listing of Kenya by the Financial Action Task Force (FATF) in 2024.[3] FATF acknowledged, however, that Kenya made a “high—level political commitment” to enhance its efforts against money laundering and terrorism financing associated with virtual asset activities. In December 2024, Kenya developed a Draft National Policy on Virtual Assets and Virtual Asset Service Providers (VASP Policy) in line with this commitment.[4]

The VASP Policy

The policy highlights gaps and challenges in the Kenya virtual assets ecosystem and provides targeted policy and strategy interventions to address them as follows.

• Gap: Lack of a clear legal framework

Intervention: Kenya will develop a legal framework for virtual assets based on global best practices. The Government plans to establish clear standards and procedures, a robust framework for consumer protection and market conduct, and a crisis management and resolution system for virtual asset activities and virtual asset service providers (VASPs). Additionally, the Government plans to establish an information sharing and judicial cooperation arrangement on virtual assets and VASPs at both the national and transnational levels.

• Gap: Lack of a risk management framework for virtual asset activities

Intervention: Kenya will develop a framework to guide and strengthen risk management for virtual asset activities and VASPs.

• Gap: Inadequate mechanisms to promote fairness, transparency and market efficiency

Intervention: Kenya will develop mechanisms to enhance consumer protection, market conduct and operations of virtual asset activities and VASPs.

• Gap: Lack of a framework to promote innovation and literacy

Intervention: Kenya Government plans to develop a framework to promote innovation in the virtual assets ecosystem. It also plans to develop a framework to promote awareness and build capacity around virtual assets and related activities.

The Virtual Asset Service Providers Bill, 2025 (VASP Bill)[5]

The bill aims to regulate the following VASPs and virtual asset activities.

• Virtual asset wallet providers who provide custodial wallets or services.
• Virtual asset exchanges that facilitate the (i) transfer and conversion services of one or more virtual assets or between virtual assets and fiat currency or (ii) sale, trade, or exchange of virtual assets for fiat currencies or for other virtual assets.
• Virtual asset payment gateway processors who arrange transactions involving virtual assets and fiat currency or between virtual assets.
• Virtual asset brokers who provide brokerage services to facilitate the exchange between one or more forms of virtual assets through virtual asset exchanges and virtual asset wallet providers on behalf of clients.
• Virtual assets investment advisors who provide investment advisory services on virtual assets, initial virtual asset offerings, and non-fungible tokens on behalf of clients.
• Virtual asset managers who manage virtual asset portfolios in accordance with mandates given by clients on a discretionary basis where such portfolios include one or more virtual assets.
• Virtual asset offering providers who issue and sell virtual assets to the public. This includes initial coin offering, tokenisation of virtual assets and issuance of stablecoins. Additionally, Kenya will regulate providers of tokenisation platforms that facilitate the issuance and secondary trading of real world assets tokens.

You need to meet stringent requirements outlined in the VASP Bill and obtain a licence to carry out these regulated virtual asset activities in Kenya. The relevant licence will be issued by the Central Bank of Kenya or the Capital Markets Authority who will be the main regulators of virtual asset activities in Kenya.

Licenced VASPs have ongoing obligation to conduct their businesses in a prudent manner and adhere to compliance requirements set out in the bill. These obligations include anti-money laundering, consumer protection, cybersecurity, and market conduct compliance measures.

Outlook

These forward-looking policy and strategy interventions to mainstream the Kenya virtual assets ecosystem into the formal economy are timely. The VASP Policy requires the Government to budget for and allocate funds needed to implement these interventions. Moreover, the policy outlines an annual monitoring and evaluation mechanism to track implementation.

If efficiently implemented, these policy interventions will provide regulatory clarity and predictability that can catalyse the growth of the Kenya virtual assets ecosystem. The VASP Bill is a good start to implement these interventions. Other priority interventions are needed. These include the development of a fair and predictable taxation framework for virtual assets aligned with the National Tax Policy and establishment of a virtual assets regulatory sandbox to encourage innovation in the virtual assets ecosystem.

Recommended Action

If you intend to offer virtual asset services in Kenya:

• Stay informed about ongoing regulatory developments and prepare to comply with the licencing and ongoing obligations.
• Assess if the virtual asset activity you currently offer or intend to offer is permissible and falls under one of the regulated activities listed in the proposed law.
• If not already registered in Kenya, get ready to incorporate an entity in Kenya that will apply for a VASP licence and maintain a registered office in Kenya.
• Anticipate and prepare for compliance with anti-money laundering, consumer protection, cybersecurity, data protection and the capital, solvency and insurance requirements that will apply to the regulated virtual asset activities and VASPs.
• Identify potential directors and principal officers who will meet the stringent fit-and-proper assessments to be carried out by the regulators. Ensure that your ultimate beneficial owner(s) meet these fit and proper requirements.
• Link up with resourceful contact persons from the vibrant Kenya fintech community including professionals advisors and business partners.

We will keep you updated of the progress of the VASP Policy, VASP Bill and other regulatory developments in this area.

[1] International Monetary Fund. Monetary and Capital Markets Department. (2025). Kenya: Technical Assistance Report-Crypto Regulation and Legislation. Technical Assistance Reports, 2025(001). Retrieved Apr 10, 2025, from https://doi.org/10.5089/9798400298233.019

[2] Ibid

[3] Financial Action Task Force. (2024). Jurisdictions under Increased Monitoring. Retrieved Apr 10, 2025, from https://www.fatf-gafi.org/content/fatf-gafi/en/publications/High-risk-and-other-monitored-jurisdictions/Increased-monitoring-february-2024.html

[4] The draft policy is available at: https://www.treasury.go.ke/wp-content/uploads/2025/01/DRAFT-NATIONAL-POLICY-ON-VAs-AND-VASPs.pdf

[5] The draft bill is available at: http://www.parliament.go.ke/sites/default/files/2025-04/THE%20VIRTUAL%20ASSET%20SERVICE%20PROVIDERS%20BILL%2C%202025%20%282%29.pdf

This article is prepared for general information. It is not, and does not aim to be, comprehensive. Given the general nature of its content, it should not be considered legal advice. For specific advice, please contact Peter.Mwaura@stephenailwoodlegal.com in our Kenya office.

The post Government of Kenya takes steps to regulate Virtual Asset Activities appeared first on Stephen Ailwood Legal.

Overview of the Bill

The Bill addresses personal property law in England and Wales, allowing certain assets to attract property rights even if they do not fit into the traditional categories of personal property: “things in possession” (tangible items) and “things in action” (enforceable rights). It implements the Law Commission’s recommendation to confirm that a thing can have legal property status even if it does not belong to these traditional categories, in response to emerging assets like crypto-tokens.

Commentary on the provisions

Clause 1 of the Bill allows assets, including digital or electronic items, to be recognized as capable of attracting personal property rights even if they are neither “things in action” nor “things in possession.” However, this does not imply that all items are property—only those that satisfy the general criteria for personal property can be. The Bill does not define specific assets, such as crypto-tokens, as property nor detail the implications of such recognition. Instead, it aims to “unlock” the common law’s development, allowing courts to determine property rights for new types of assets. Although the Bill mentions digital or electronic items like crypto-tokens, it remains open to recognizing other emerging assets without specifically defining them as property.

Clause 2(1) states that the Bill applies to England and Wales. Clause 2(2) provides that the Bill will come into effect two months after it is passed.

Commencement

The Bill’s implementation is pending consent from the Law Officers, which would allow it to come into force immediately after Royal Assent. Clause 2(2) will be updated if consent is granted.

Financial Implications of the Bill

The Bill has no financial implications and does not require the use of specific assets. It aims to provide clarity and legal certainty regarding the treatment of certain assets.

The information provided in this article is for general informational purposes only and does not constitute financial, investment, or legal advice.

The post Crypto Assets Bill appeared first on Stephen Ailwood Legal.