Hong Kong has taken the lead in improving cryptocurrency regulations for digital assets and exchanges within the city. Recently, the High Court of Hong Kong made a landmark ruling by declaring cryptocurrency as property. This decision, outlined in a newly released report, marks t...
Hong Kong has taken the lead in improving cryptocurrency regulations for digital assets and exchanges within the city.
Recently, the High Court of Hong Kong made a landmark ruling by declaring cryptocurrency as property. This decision, outlined in a newly released report, marks the first time the city has officially recognized digital currencies as a type of property.
Gatecoin Limited, a cryptocurrency exchange platform operating in Hong Kong since 2015 until its collapse four years later, was involved in a legal matter that resulted in a ruling being handed down.
Earlier, Hong Kong watchdogs had instructed the Gatecoin platform to cease operations in the city. This was because the exchange had failed to provide liquidation after losing assets during a disagreement with its service providers.
Gatecoin had been directed to stop its operations due to non-compliance with the regulatory requirements of the watchdogs. The directive had been issued following Gatecoin’s failure to meet its obligations and responsibilities towards its customers.
Following the shutdown of Gatecoin, customers asked the court to determine ownership of the crypto assets that remained in the exchange’s accounts. Specifically, they wanted to know whether the assets belonged to Gatecoin or the customers “on trust.”
Justice Linda Chan clarified to Gatecoin customers that the remaining funds on the platform were not held in trust. However, according to the domestic law firm Hogan Lovells, she also emphasized that cryptocurrency is considered inheritable property.
Similar rulings have been made in Mainland China recently, while the United States Internal Revenue Service (IRS) treats cryptocurrency as property for tax purposes.
The ruling by the High Court is expected to have significant implications for the treatment of cryptocurrencies in Hong Kong. By being recognized as property, digital currencies can now be subject to the same legal protections as other forms of property.
This move by the High Court is a significant step towards the mainstream adoption and acceptance of cryptocurrencies in Hong Kong. It is also likely to lead to further development and refinement of regulations surrounding the use and trade of digital assets within the city.