In a court case linked to the currently-defunct crypto exchange Gatecoin, a Hong Kong judge has ruled that cryptocurrencies are “ property ” which is “ capable of being held on faith. ” According to the law enterprise Hogan Lovells, this case should deliver greater clarity to insolvency practitioners and different common law jurisdictions.
Hong Kong Judge Designates Crypto Assets as ‘Property’ That Can Be ‘Held on Trust’
According to a summary of the ruling issued on April 18, 2023, Judge Linda Chan in Hong Kong has classified crypto assets as “ property. ” The decision was made in relation to the Gatecoin crypto exchange liquidation court case from 2019. Law enterprise Hogan Lovells opines that this decision provides clarity to officials, regulators, and different common law jurisdictions. In the United States, there's presently a debate in Congress about whether certain crypto assets should be classified as securities or commodities.
At the start of the Gatecoin liquidation operation, liquidators had difficulty determining whether crypto assets constituted a form of property. According to the Hogan Lovells summary, Judge Chan has defined crypto assets as a type of property that can be “ held on trust. ” Hogan Lovells notes that this ruling “ should provide greater clarity to Hong Kong insolvency practitioners regarding the nature and scope of a company’s digital assets in a winding-up scenario. ” The law enterprise adds:
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 whose courts have already decided the issue.
Judges in various court cases around the world have issued such rulings. For example, last year, an intermediate court in Beijing, China ruled that virtual property is shielded by Chinese law. also, China’s Supreme Court has recommended raising the legal protection of property rights that include crypto assets and virtual property. exploration indicates that most countries consider virtual currencies as property, while others and regulatory agencies have ultimately to make a decision.
(Jamie Redman, Bitcoin.com, 2023)