Whilst Singapore recently declared crypto is "not money," Hong Kong has declared the asset is property
Hong Kong has declared that crypto can be recognised as property and can thus be held on trust.
The declaration came as part of a case involving the now-defunct local crypto exchange Gatecoin.
Law firm Hogan Lovells made the revelation in a blog post, stating, "in a landmark ruling, the Honourable Madam Justice Linda Chan, in Re Gatecoin Limited [2023] HKCFI 91, found that cryptocurrency inherently has all the attributes of property."
As cryptocurrencies are property, they can be held on trust, according to the Hong Kong court. Gatecoin's terms and conditions "made it clear that cryptocurrencies were not held on trust for its customers due to lack of certainty of intention," the law firm said.
Chan said Hong Kong defines "property" broadly, "intended to have a wide meaning," which is in line with other common law jurisdictions.
Gatecoin shut down in 2019 and began liquidation in an attempt to recover disputed funds from a payment services provider. The exchange held US$17.8 million in crypto as of last October.
Liquidators looked to the court to determine whether Gatecoin's crypto should be treated as property held on trust.
"If no trust existed, the digital assets should be made available to the general body of creditors," Hogan Lovells said.
The law firm said that the ruling should now give Hong Kong liquidators "greater clarity" on how to treat crypto assets.
Lack of global consensus
Hong Kong's crypto-as-property ruling is echoed in other jurisdictions such as Mainland China and in the UK.
However, a Singapore judge recently declared that crypto is "not money" and rejected the premise that fiat debt procedures apply to crypto.
Read more: Is Crypto Actually Money? Singapore Judge Says No
The US is also facing an internal debate about what cryptocurrencies are. Whilst the Internal Revenue Service treats crypto as property for tax purposes, the SEC argues that Ethereum is security, and the CFTC concluded the second largest crypto is a commodity.
Read more: Ethereum is a Security Again as NYAG Sues KuCoin Exchange
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