Digital Transformation Notes | March 2024

Starting in the U.S., the Executive Order issued by President Biden on 28 February 2024 introduces robust measures to safeguard Americans' sensitive personal data against exploitation by “countries of concern” and their organizations. It empowers the U.S. Attorney General to prevent the large-scale transfer of personal data, including genomic, biometric, health, geolocation, financial, and other identifiers, to such countries. The order targets the risks that commercial data brokers and entities may be controlled by such countries of concern, addressing privacy, counterintelligence, and national security risks. It mandates the Department of Justice, Homeland Security, Health and Human Services, Defense, and Veterans Affairs to establish protections and high security standards. The initiative underscores the United States' commitment to data privacy, open internet, and civil liberties while encouraging the U.S. Congress to pass comprehensive privacy legislation in that context.
 
In a way, this Executive Order tries to make up for the otherwise limited protection against the transfer of personal data to countries outside the U.S. (contrary to the more stringent rules of the General Data Protection Regulation in the EU).  It is another indication of the significant threats posed to personal data in the digital age, and the need for fine-tuned protection of this data against misuse, particularly when geopolitical tensions are high. In the months to come, we can expect follow up activities by the U.S. Government departments so ordered.

On a completely different topic, the EU Commission published a whitepaper on 21 February entitled “How to master Europe’s digital infrastructure needs”. The whitepaper looks at how to revolutionize Europe’s digital infrastructure, ensuring it is equipped for the demands of a modern digital economy and society. Recognizing the crucial role of advanced digital networks in fostering innovation, the document outlines a vision for a cohesive digital market, addressing the challenges and investment needs within the EU’s electronic communications sector. It highlights the importance of transitioning to fibre networks, 5G, and cloud-based infrastructures to enhance connectivity, improve resilience, and secure the EU’s competitive edge in the global digital landscape. It also proposes a future “Digital Networks Act” that will intend to establish a modern regulatory framework for a digital network infrastructure, promoting investment in future-proof digital infrastructures, and ensuring Europe moves towards the forefront of digital innovation. The whitepaper underscores the EU's commitment to creating a secure, competitive, and innovative digital future, and is aimed at stakeholders in the law and digital technology sectors, including legal professionals.
 
In yet another field of law related to digital transformation, the UK’s Law Commission issued a consultation on 22 February proposing a one clause bill outlining that digital assets qualify as personal property rights. In general terms, the proposal seeks to adapt English property law to the digital age by establishing a third category of personal property for digital assets, including crypto-tokens and possibly other tokenized assets. This innovative step aims to clarify the legal status of digital assets, moving beyond the traditional dichotomy of "things in possession" and "things in action” (i.e., possession-based property rights on the one side and claim-based quasi property rights on the other side). The recommendation follows a decade of evolving case law that increasingly recognizes digital assets as objects of personal property rights, despite not fitting neatly into existing categories. The proposed statutory confirmation is intended to provide legal certainty, encourage innovation, and adapt to the digital transformation, without mandating intermediation or limiting self-custody of assets. While the proposal acknowledges that it won’t resolve all questions surrounding intangible property, it marks a significant advancement in recognizing the unique nature of digital assets in law.

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Authored by Leo von Gerlach.