Hong Kong Court Recognizes Crypto as Property
- The decision has placed Hong Kong in line with other common law jurisdictions that had previously ruled crypto had the same attributes as property.
- This will give liquidators in Hong Kong greater clarity on how to handle crypto held by companies that are winding down.
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A court in Hong Kong has ruled that cryptocurrencies can be recognized as property “capable of being held on trust”, law firm Hogan Lovells said in a report published on 19 April.
The law firm cited Justice Linda Chan — the judge presiding over a case involving defunct crypto exchange Gatecoin — who said that cryptocurrencies had the same attributes as that of property, and that it can be held in trust. This decision puts Hong Kong in line with other common law jurisdictions, whose definition of “property” also had a “wide meaning” intentionally.
Hogan Lovells noted that this ruling will give liquidators in Hong Kong a “greater clarity” on how to treat cryptocurrency assets held by companies that are undergoing wind-down procedures.
Chan’s ruling is similar to a 2019 court ruling in mainland China, when the Hangzhou Internet Court legally recognized Bitcoin (BTC) as digital property. Other jurisdictions have also made similar decisions, with the U.S. Internal Revenue Service (IRS) recognizing crypto as property for federal tax purposes.
- These documents are seen as central in Ripple’s battle against the SEC, which in 2020 accused the company of selling its XRP token without registering it as a security.
- The documents in question are internal emails, text messages, and expert reports that followed Hinman’s 2018 speech, in which he said ETH and BTC were not securities.
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- The Economic and Financial Affairs Council of the EU, which is comprised of finance ministers of all 27 member states, unanimously approved the MiCA crypto regulation.
- The EU’s finance ministers also also gave their consent to new measures that will allow tax authorities to collect data on individuals’ cryptocurrency holdings.
- The U.S. SEC claimed in its response that it was under no obligation to issue new regulations for crypto, and that rules for crypto were already published and were sufficient.
- The agency also tried to distance itself from any public comments made by its chair Gary Gensler, particularly regarding his statement that most cryptocurrencies are securities.