The U.K. now formally recognizes cryptocurrency as property following the passing of a new law this week.

The Property (Digital Assets etc) Act received Royal Assent, the final step of an act becoming law after being passed by Parliament.

The act, approved by King Charles on Tuesday, was designed to modernize property law to take account of digital assets. Previously, property fell into one of two categories: things in possession, such as physical objects, and things in action, such as a debt.

The law establishes a third category that includes digital assets such as cryptocurrencies and non-fungible tokens (NFTs).

Crypto industry associations welcomed the law, hailing it as an important step in the legal recognition of digital assets and therefore instilling greater confidence for users.

"This change provides greater clarity and protection for consumers and investors by ensuring that digital assets can be clearly owned, recovered in cases of theft or fraud, and included within insolvency and estate processes," trade association CryptoUK wrote in a post on X.

"By recognising digital assets in law, the UK is giving consumers clear ownership rights, stronger protections, and the ability to recover assets lost through theft or fraud," Gurinder Singh Josan MP, co-chair of the Crypto and Digital Assets All Party Parliamentary Group (APPG) wrote in an emailed comment.

Cryptocurrency has previously been treated as property in court, but this has been on a case-by-case basis. This act makes the recognition law.