The High Court of Hong Kong has recognized crypto to be property and this landmark ruling was handed down in a legal matter involving Gatecoin Limited, reported by the law firm Hogan Lovells.
After failing to recover funds, Gatecoin (not to be confused with Gate.io) was given the order to discontinue operations and go through liquidation. After Gatecoin was shut down in March 2019, its liquidators asked the court for advice on whether the cryptocurrency it still had belonged to clients “on trust” or might be distributed to general creditors.
In the event of liquidation, cryptocurrency kept on trust is held for the advantage of certain clients. In the case of Gatecoin, the cryptocurrency would be held in a fiduciary capacity, with the exchange in charge of custody and management prior to its release.
While Justice Linda Chan’s ruling found that crypto inherently has all the qualities of property, per domestic law firm Hogan Lovells. Chan’s ruling also means crypto is legally capable of being held in trust, the law firm added as “property” is inclusive and intended to have a wide meaning.
“The confirmation that holdings of cryptocurrencies constitute ‘property’ that is on a par with other intangible assets such as stocks and shares, brings Hong Kong into line with other common law jurisdictions,” Hogan Lovells said.
Although other regulatory bodies define cryptocurrency differently depending on their jurisdiction, the US Internal Revenue Service similarly views cryptocurrency as property. Meanwhile, Hong Kong’s property judgment comes as the city-state works to restore its reputation as a digital assets hub.
Clara Chan, Hong Kong central bank executive director, said during a Web3 Festival conference: “We don’t want to stifle financial innovation but level the playing field among participants to unlock the potential for the industry. We look forward to harnessing Web3 for the force of good.”
Also read: Hong Kong Aims to be Crypto Hub Despite Market Turmoil
