In a court case involving the now-defunct Gatecoin cryptocurrency exchange, a Hong Kong judge has ruled that cryptocurrencies are “property” that is “capable of being held in trust.” According to the Hogan Lovells law firm, this case should bring more clarity to insolvency professionals and other common law jurisdictions.
Hong Kong judge designates crypto assets as “property” that can be “held in trust”
according to a sentence summary Posted on April 18, 2023, Judge Linda Chan in Hong Kong has classified crypto assets as “property.” The decision was made in connection with the 2019 Gatecoin crypto exchange liquidation court case. Law firm Hogan Lovells is of the opinion that this decision provides clarity for officials, regulators, and other common law jurisdictions. In the United States, there is currently a debate in Congress about whether certain crypto assets should be classified as securities or commodities.
Early in the Gatecoin liquidation process, the liquidators had difficulty determining whether the crypto assets constituted a form of ownership. According to Hogan Lovells’ summary, Judge Chan has defined crypto assets as a type of property that can be “held in trust.” Hogan Lovells notes that this ruling “should provide greater clarity to Hong Kong insolvency practitioners regarding the nature and extent of a company’s digital assets in a liquidation scenario.” The law firm adds:
Confirmation that cryptocurrency holdings constitute “property” on a par with other intangible assets such as stocks and shares brings Hong Kong in line with other common law jurisdictions whose courts have already decided the issue.
Judges in various court cases around the world have issued similar rulings. For example, last year, an intermediate court in Beijing, China, ruled that virtual property is protected under Chinese law. In addition, the Supreme Court of China recommended increasing the legal protection of property rights including crypto assets and virtual property. Research indicates that most countries they consider virtual currencies as property, while others and regulatory agencies have yet to make a decision.
What do you think about the classification of crypto assets as “property” by Judge Chan in Hong Kong, and how do you think this ruling will affect the treatment of crypto assets in insolvency cases and other common law jurisdictions around the world? Share his thoughts on this subject in the comments section below.
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