Bitcoin is recognized as property by a Hong Kong court

The Hong Kong High Court has ruled that cryptocurrencies are property, setting a precedent for the city’s treatment of digital assets by the state. The landmark decision was made in a case involving Gatecoin Ltd, a local cryptocurrency exchange that ran from January 2015 until its closure four years later.

The cryptocurrency was classified as property during a case involving digital assets still held by the closed Gatecoin exchange in Hong Kong.

Gatecoin (not to be confused with Gate.io) was ordered to suspend operations and go into liquidation after failing to recover money that was lost during a dispute with a payment service provider. When Gatecoin was shut down in March 2019, its liquidators asked the court for advice on whether the cryptocurrency it still held belonged to clients “in trust” or could be distributed to general creditors. In the event of liquidation, cryptocurrency held in trust is held for the benefit of certain clients. In the case of gatecoinThe cryptocurrency would be held in a trustee capacity, with the exchange taking care of custody and management prior to its launch.

According to the National Law Firm hogan lovells, Judge Linda Chan declared that cryptocurrency inherently possesses all the characteristics of property, even if she found that money held by creditors on the exchange was not held in trust. According to Hogan Lovells, Chan’s decision also establishes the legitimacy of holding cryptocurrencies in trust. Following the announcement of her decision, Chan said Hong Kong’s definition of “property” is inclusive and intended to have a broad connotation.

The claim that cryptocurrency holdings are “property” comparable to other intangible assets like stocks and shares aligns Hong Kong with other common law jurisdictions, according to Hogan Lovells. Though other regulatory bodies classify cryptocurrencies differently based on their areas of responsibility (the Securities and Exchange Commission classifies many as securities, while the Financial Crimes Enforcement Network treats companies that handle digital assets as “money transmitters”) ), the US Internal Revenue Service also considers cryptocurrencies as property

However, Hong Kong’s property trial comes as the city-state works to restore its reputation as a hub for digital assets. While speaking at the recent Web3 Festival conference in the area, Clara Chan, chief executive of Hong Kong’s central bank, said:

“We don’t want to hinder financial innovation, but rather to level the playing field among participants to unleash the potential of the industry. We are excited to use Web3 as a force for good.”

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