A Hong Kong court has affirmed cryptocurrency as property “capable of being held on trust” in a case involving the defunct crypto exchange Gatecoin.
iexclusivenews reports that according to Justice Linda Chan, who presided over the case, Hong Kong, like other common law jurisdictions, defines “property” broadly and “intended to have a wide meaning.”
Similar decisions have been made in Mainland China, and the Internal Revenue Service in the United States considers cryptocurrency to be property for tax purposes.
Crypto can be classified as a new type of property under existing laws in England and Wales, according to a government-funded law commission in the United Kingdom.
Following an attempt to recover disputed funds from a former payment services provider. Hong Kong-based crypto exchange Gatecoin announced its closure and liquidation in 2019.
What You Should Know
According to the Hogan Lovells report, liquidators asked the court for guidance on whether the crypto held by Gatecoin should be treated as property held on trust. Or “if no trust existed, the digital assets should be made available to the general body of creditors.”
According to the report, the exchange held up to 140 million Hong Kong dollars ($17.8 million) in cryptocurrency as of last October.
“While the court determined that cryptocurrencies are capable of forming the subject matter of a trust more generally, on the facts in this particular case it found that a trust had not been established,” the report said.
According to Hogan Lovells, a ruling would provide Hong Kong liquidators with “greater clarity” on how crypto assets held by companies should be treated in wind-down procedures.
Meanwhile, iexclusivenews Nigeria reports that Hong Kong has been advocating for clearer crypto regulations.
Bernstein said earlier this year that Hong Kong’s approach to regulating cryptocurrency could attract capital at a time of global regulatory uncertainty.
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