Hong Kong Now Considers Crypto As A Form Of Property• April 20, 2023 10:52 am • Comments
The legal classification of cryptocurrency as an asset class has long been debated among investors, financial insitutions and regulatory agencies.
Just recently, it was revealed Hong Kong’s High Court just passed a new decision that would recognize cryptocurrency as a form of property.
This is the first time that this has ever happened in the region and could set a precedent for other regions around the world to do the same.
The ruling was done as part of a legal case that involved a domestic crypto exchange that had eventually concluded.
If crypto is able to be classified as property, then this may help encourage more widespread adoption of digital assets as they now follow clear regulatory guidelines which will encourage more investors.
— Bitcoin News (@BTCTN) April 19, 2023
The verdict came 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.
According to an analysis of the ruling published by the law firm Hogan Lovells, Judge Linda Chan, who presided over the case, stated that cryptocurrency possesses property attributes.
The court concluded that it was reasonable to adopt the same reasoning used by other jurisdictions that recognize crypto as property and could, therefore, be subject to a trust arrangement.
This ruling clarifies the legal status of cryptocurrency in Hong Kong and paves the way for its wider adoption and usage in the city-state.
This provides a global direction that digital assets should not be considered securities and thus do not fall under securities regulations.
Additionally, the definition of a property in Hong Kong is quite broad and it includes the fact that it is property that is capable of being held on trust.
Property also has a wider variety of different use cases and could more easily be used as collateral for loans.
On the other hand, the IRS currently only considers crypto as property for the specific purposes of taxes which means it does not have any of the benefits of property assets.
A Hong Kong court has decided crypto should be treated as property held on trust in a case involving now-defunct crypto exchange Gatecoin, according to law firm @HoganLovells. By @iamsandali.https://t.co/yOFGQdgEog
— CoinDesk (@CoinDesk) April 19, 2023
The 2018 terms and conditions of the exchange platform showed “no certainty of intention to create a trust over the cryptocurrencies held by Gatecoin,” the judgment said.
A ruling would give Hong Kong liquidators “greater clarity” on how crypto assets held by companies should be treated in wind-down procedures, Hogan Lovells said.
Hong Kong has been pushing for clearer regulations for the crypto sector. Brokerage firm Bernstein said earlier this year that Hong Kong’s approach to regulating crypto could attract capital to the jurisdiction at a time of global regulatory uncertainty.
CoinDesk has reached out to Hogan Lovells for comment.
This is so bullish 🔥
— Crypto Oracle ⚡🇷🇴 (@CryptOracl) April 19, 2023
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