Hong Kong Acknowledges Cryptocurrency As A Form of Property
Hong Kong’s High Court has recognized cryptocurrency as a form of property, marking the first such ruling in the city-state. The decision was made as part of a legal case involving Gatecoin Limited, a domestic crypto exchange that operated between January 2015 and its eventual closure four years later. Judge Linda Chan stated that cryptocurrency possesses property attributes and could be subject to a trust arrangement. The ruling brings Hong Kong in line with other jurisdictions that also consider crypto as property, like mainland China and the United Kingdom. The decision is expected to pave the way for wider adoption and usage of cryptocurrency in Hong Kong and could help insolvency practitioners better understand how to handle digital assets. The report also stated that the ruling would help liquidators in Hong Kong gain increased clarity and understanding regarding the appropriate treatment of digital assets held by companies during wind-down procedures. Gatecoin announced its shutdown and liquidation after trying to recover disputed funds from a former payment services provider, during which the appointed liquidators sought the court’s opinion on whether the cryptocurrency held by Gatecoin should be regarded as property held on trust. As of October last year, the exchange held up to HKD 140 million ($17.8 million) worth of cryptocurrency. The Hogan Lovells report suggested that while the court determined that cryptocurrencies were able to form the subject matter of a trust, on the facts of this particular case, it found that a trust had not been established.
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