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I will just respond to Murdo Fraser and then wind up. We have reflected on all these issues. We are considering stage 3 amendments, but that issue is not one that we are addressing, or that has been brought to our attention as requiring any further clarity.

We are looking at addressing perhaps one other issue at stage 3. We will write to the committee shortly to give it forewarning of any potential stage 3 amendments for further clarity. We have a short timetable for the bill and we are looking at potential opportunities to provide more clarity at stage 3, but the issue that Murdo Fraser raised is not on our radar. We are satisfied with that wording at the moment.

Again, amendment 3 gives additional clarity in terms of expressing ownership positively in the bill, in response to feedback from the faculty, as we discussed.

Amendment 3 agreed to.

Section 4, as amended, agreed to.

Section 5 agreed to.

After section 5

Amendment 4 moved—[Richard Lochhead]—and agreed to.

Sections 6 to 9 agreed to.

Long title agreed to.

Good morning. It is good to join committee members for stage 2 consideration over the next five minutes or so—maybe longer. I thank the committee and all stakeholders for their comments on the bill. The amendments in the group address two key issues that were raised at stage 1 and make the bill stronger as a result.

In its stage 1 report, the committee asked the Scottish Government to reflect on whether certain things should be excluded from the bill’s provisions with a view to lodging any necessary amendments at stage 2. Some stakeholders, in their stage 1 evidence, expressed concern that the bill might disapply other legislation unintentionally or could otherwise lead to uncertainty about which legislation should apply when certain things are deemed to be digital assets by the bill. Having listened to stakeholders and the committee, and having considered that further, I have lodged amendments 2 and 4, which make it clear that the substantive provisions of the bill—sections 2 to 4—are subject to any other enactment, whenever passed or made. Therefore, the amendments effectively look both backwards and forwards.

The bill provides that section 2 is “subject to any enactment”. Amendment 4 extends that requirement to sections 3 and 4. Amendment 2 amends section 2 in light of that broader approach.

The amendments align with the suggestion that was made by the Rt Hon Lord Hodge in his additional written submission to the committee, dated 19 December. My officials have engaged with him and Professor Fox in the development of amendments 2 and 4, as well as amendment 1.

Amendments 2 and 4 provide that, if there is specific provision in other legislation that relates to the nature, ownership or acquisition of ownership of things that qualify as digital assets, the relevant provisions in that other legislation will apply. Looking forward, likewise, the amendments mean that, if future legislation makes provision about the nature, ownership or acquisition of ownership of things that qualify as digital assets, and if that provision is inconsistent with the provision made in the bill, the provisions in future legislation will take precedence over any relevant provisions in the bill, to the extent of any inconsistencies.

I turn to amendment 1. It is important that the bill does not undermine legal certainty where it already exists. Issues that are specific to electronic trade documents were raised in evidence by a representative of the Law Society of Scotland, academics at the University of Aberdeen and members of the committee. They advanced the position that such documents should be specifically excluded from the bill’s scope, given that they are already governed by provisions in the Electronic Trade Documents Act 2023.

Having considered that evidence, I lodged amendment 1, which explicitly excludes electronic trade documents, as they are defined in the 2023 act, from the definition of a digital asset in the bill. That means that the bill’s provisions will not apply in relation to those electronic trade documents. I ask members to support my amendments in the group.

I move amendment 1.

I thank committee members for understanding the need for the amendments, which are about providing clarity and listening to the feedback in the committee’s report and from stakeholders.

Amendment 1 agreed to.

Section 1, as amended, agreed to.

Section 2—Nature of digital assets in Scots law

Amendment 2 moved—[Richard Lochhead]—and agreed to.

Section 2, as amended, agreed to.

Section 3 agreed to.

Section 4—Acquisition of ownership

Amendment 3 relates to good-faith acquisition for value in section 4(2) of the bill. In its stage 1 report, the committee called on the Scottish Government to reflect on the framing of the provision after hearing from a representative of the Faculty of Advocates that the existing provision would benefit from being reframed so that ownership by a good-faith acquirer for value is stated in a positive sense. The bill provides that such an acquirer is not prevented from becoming the owner of a digital asset, but it does not positively state that the acquirer will become the owner.

Following stage 1, officials engaged with the Faculty of Advocates, to which I express my gratitude for its on-going involvement with the bill. I am pleased to confirm that the faculty has indicated its support for the reframed version that is set out in amendment 3.

I move amendment 3.

From my limited knowledge of what other jurisdictions are doing, I think that all countries and jurisdictions are facing these dilemmas. We do not have a solution in the bill to that potentially growing and futuristic problem. The bill sets down thresholds or tests for what would be deemed a digital asset or property. If someone were to make a challenge along the lines of what you are speaking about in relation to AI and what may be deemed property that is produced by AI, it would be up to the courts to see whether that passed the test that this legislation sets. Those are big issues for the future.

I think that they want to comment from the policy and the legal sides. I will bring in the policy side first.

My understanding—from the expert reference group and from the evidence that was given to the committee—is that the tight definitions that you referred to were in order to differentiate between types of electronic documents, as not all electronic documents are defined as property. We have to define property, as well as other types of electronic documents.

Examples that were given to the committee, and that were given by the expert reference group, include that a digital image or an electronic document—such as an email—is not defined as property in Scots law. We therefore have to differentiate between types of electronic documents, and that is why definitions such as “immutable” or “rivalrous” come into play. They are to differentiate between what can and cannot be easily copied and what is and is not property.

I will bring in Fraser Gough to explain the legal background.

I noted the points that the witnesses made, but they also said that they felt that the approach was satisfactory. Clearly, that is linked to avoiding double selling—there must be safeguards in place to avoid double selling and therefore the systems that are used must be immutable so that records cannot be changed.

Ultimately, it will be for courts to decide, should they have to look at the matter in detail. However, anyone who is reading this will know what is being asked of the legislation and what it means with regard to not tampering with records and the fact that we cannot allow a system that permits double selling.

We will reflect on that, and in particular on the point about the explanatory notes and so on. Some witnesses said that they would be reluctant for guidance to be issued because they are content that there is certainty in the bill. They said that they wanted the bill to be technology neutral, and pointed out that the world will change and that we cannot predict what those changes will be, so the more prescriptive we are, the more issues that could cause in the future.

I am happy to reflect on the evidence. Again, I noticed that there was a slight differentiation between the evidence from those who were coming at this from a legal perspective and the evidence from those who had a wider technology interest. Those who wanted the law to be clear as to the property status of digital assets were content. Obviously, however, there is a wider debate about some of the issues that other witnesses mentioned.