Hong Kong, once believed to be pro-crypto through and through, has just taken everyone on the wrong foot by classifying digital assets as property. A big disappointment for the crypto community! The case that started it all involved crypto assets held by former exchange Gatecoin. The Hong Kong High Court ultimately ruled against the crypto, recognizing it as property.
Hong Kong court recognizes crypto as property!
Hong Kong has always been a popular destination for cryptocurrency companies to set up their headquarters and conduct their business. However, the recent High Court decision has caused concern in the community.
Indeed, the report from law firm Hogan Lovells, published on Wednesday, April 18, reports that Judge Linda Chan highlighted the decision to consider crypto property. It was a first in Hong Kong history that an unfavorable decision against crypto was made.
The court made its decision during the case which involved the former exchange platform, Gatecoin Limited. It had to suspend operations and liquidate its funds after failing to recover assets lost in a disagreement with a payment service provider.
Gatecoin’s liquidators consulted legal experts to determine whether the assets held by the platform were only for customers “in trust” or if they could be used to pay off all creditors. In making the decision, Judge Chan noted that the ” property from Hong Kong encompasses several broad meanings.
According to Hogan Lovells, this decision puts Hong Kong in compliance with other common law jurisdictions by confirming that cryptocurrency holdings constitute “property” that is on par with other intangible assets such as stocks and bonds.
Ultimately, while this decision may seem unfavorable to cryptocurrencies, it also raises questions about the future regulation of digital assets in Hong Kong. It is therefore crucial to closely monitor the development of this situation and see how it could affect crypto businesses operating in the territory.
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