For the first time, a court in Hong Kong pronounced crypto assets as property in a lawsuit involving the defunct exchange Gatecoin, according to an analysis by law firm Hogan Lovells on Wednesday. In the notable ruling, the judge who presided over the case, Justice Linda Chan, stated that cryptocurrency possesses similar qualities to a property, and the court will treat it as one.
According to the ruling, since crypto assets can be referred to as property, they could be held in a trust. A trust is an arrangement between a third party and a grantor to keep an asset and pass it to a beneficiary in due time.
Crypto as Property in Hong Kong
Hong Kong joins a class of common law jurisdictions that recognize cryptocurrencies as property. According to Hogan Lovells, the acceptance would mold the nation’s view toward digital assets, as the ruling meant cryptocurrencies held the same value as stocks and bonds.
“Like other common law jurisdictions, our definition of ‘property’ is an inclusive one and intends to have a wide meaning,” Chan stated.
Like Hong Kong, some other institutions recognize cryptocurrency as property. The Internal Revenue Service in the US sees crypto assets as property for federal tax purposes. Before the ban in China, a court recognized Bitcoin as legal property in 2019.
Chan made the pronouncement in a case that involved Gatecoin, a crypto exchange based in Hong Kong. A $2 million hack back in 2016 hampered the exchange’s operations, a court order then forced the firm to wind up in March 2019.
Hong Kong Steadies Its Crypto Hub Ambitions
Hong Kong is taking all the right steps to position itself as a global crypto hub. Although its closest neighbor, China, has upheld its crypto ban, banks in the country have shown support for the initiative Hong Kong is taking.
The Asian country recently allocated $6 million for Web3 development after stating plans to allow retail investors to trade crypto assets. Hong Kong has shown a willingness to attract foreign investments from crypto firms, especially from the US.
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