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I remind the committee that there is a lot of support for the bill and for its short, sharp focus. There are other debates at the edges about what changes to technology will mean for the future, and many witnesses spoke about that, but there is a lot of support for the bill and for the need to have it now.

You are looking at Fraser, but I do not know whether he wants to answer that.

Fraser Gough can come in on the legality around that.

I can bring the committee’s views to the attention of the Cabinet Secretary for Justice and Home Affairs who will, no doubt, be looking at those issues. They are also issues for Scottish Law Commission advice, because many of the steps that we take are in response to recommendations from the Law Commission. I am happy to write to the committee on that.

No, not really. I commend the committee for the three evidence sessions that it has had on the bill. Those have been quite comprehensive, and the evidence that the committee has received has been illuminating and interesting. I therefore commend the committee for its hard work on this.

Good morning. I appreciate the opportunity to speak to the committee today about the Digital Assets (Scotland) Bill. The bill will implement key recommendations that were made in 2023 by the digital assets in Scots private law expert reference group, which was chaired by the Rt Hon Lord Hodge. The purpose of the bill is to clarify Scots law by confirming that digital assets are capable of being objects of property.

Digital assets have become an increasingly important component of financial services and economies across the globe, and the proliferation of digital assets is continuing at pace. Those assets, which are often recorded on and transferred through distributed ledger technology, such as a blockchain, provide significant economic opportunities. It is estimated that the value of the blockchain technology market to Scotland is likely to reach £4.48 billion by 2030. Wider adoption of the technology is expected to bring about improvements in supply chain activities, healthcare systems and financial transactions.

The Scottish Government places importance on supporting a business-friendly environment and economic growth, including across specialist digital asset trading businesses, the asset management sector and the financial technology sector, which is also known as fintech.

Individuals—not just businesses—are using digital assets for payment and investment purposes. Bitcoin, the most well-known cryptocurrency, traded at just under £300 about 10 years ago. At the start of this week, that same asset traded at just under £65,000. In addition, in 2024, consumer research by the Financial Conduct Authority showed that 12 per cent of United Kingdom adults—in other words, about 7 million people—hold crypto assets. On that basis, the estimated figure for Scotland is around 540,000 adults. With that figure expected to grow, it is appropriate that our legal system provides greater legal certainty for our citizens when it comes to the assets that they are increasingly choosing to use for payments and savings.

As the committee will be aware, digital assets are not readily incorporated by the existing classifications of property under Scots law, which creates legal uncertainty. The bill will address that by providing the necessary legislative foundation for Scots law to accommodate modern business practices. Like most of the witnesses that you heard from, I think that we have achieved that legislative foundation.

The bill is a deliberately short piece of legislation with a narrow scope of application. It is restricted to providing certain digital assets with the status of property. It will achieve that by confirming what is meant by a “digital asset” for the purposes of the bill, by categorising digital assets as incorporeal moveable property and by establishing basic rules on the acquisition and transfer in ownership of digital assets.

Scotland is not unique in needing to reform its laws to better accommodate digital assets. Many jurisdictions are legislating so that their legal systems and property laws appropriately incorporate these new technologies. However, the bill approaches the changes that are required from the unique perspective of Scots law, and I am glad to introduce a bill that will bring our legal system into line with developments across the UK and internationally towards recognising certain digital assets as objects of property.

I have read with interest the evidence that was provided to the committee. I am pleased that there has been broad consensus on the general purposes of the bill. I look forward to working with the committee as the bill progresses, and my officials and I are ready to do our best to answer your questions—especially my officials, given that there are important legal aspects to the topic.

We are confident. The aim of the expert reference group was to establish key principles and reflect them in this short bill, which defines what would be counted or classified as property in terms of digital rights. That is there, so we can start working up lists of what is excluded. That is a different approach altogether. It is like a devolution argument—what is reserved and what is devolved, and we just leave everything devolving. That is the approach taken by the expert reference group. We are content to lay down the key principles in law of what defines digital assets as property. If something does not reach those thresholds, it will fail the test.

I will reflect on that. Again, if the committee recommends that, we will take the recommendation on board.

The bill determines what is classified as digital property. Other legislation deals with other issues, such as people being conned out of money and the law being broken.

Scots law is distinctive, and I think that if you were to look at many Scots acts of Parliament, you would not recognise a lot of phrases. I am not sure that there is anything unusual in having some obscure phrases, as far as the general public is concerned, in our legislation. Clearly, the expert reference group felt that the terms were appropriate. “Rivalrous” is a commonly used concept in economics and business, so the group felt that it was appropriate.

With regard to coming up with legislation that deals with the modern world of digital assets, being “immutable”, which means that the records cannot be changed, is important for being “rivalrous”, in that only one person can use the digital asset. A second person cannot use it, because one person is already using it. Therefore, the two concepts are closely interlinked. We have to define property in a digital world, and the expert reference group took the approach that this was the appropriate way in which to do it.

A lot of jurisdictions have been taking forward similar legislation. I do not pretend to know what is in other countries’ legislation, because a lot of countries have been legislating on the issue. We have to take our guidance from the expert reference group, which explained its rationale as to why this was the best way forward when it gave evidence to the committee.