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A court located in Hong Kong has recognized cryptocurrencies as property that can be held in trust in a decision related to the now-defunct crypto exchange Gatecoin.
In a report released by the law firm Hogan Lovells, Justice Linda Chan stated that cryptocurrencies possess the characteristics of property. The court concluded that it was fitting to adopt the reasoning used by other jurisdictions that classify crypto as property, which can serve as the subject matter of a trust. Chan remarked:
"Like other common law jurisdictions, our definition of 'property' is an inclusive one and intended to have a wide meaning."
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According to Hogan Lovells, this new ruling may provide insolvency practitioners in Hong Kong with enhanced clarity regarding digital assets. The acknowledgment that cryptocurrencies are property akin to other assets, such as stocks, aligns Hong Kong with other jurisdictions.
Related: IRS reminds taxpayers of crypto income reporting ahead of 2022 filing
In the United States, the Internal Revenue Service (IRS) classifies cryptocurrencies as property for federal tax purposes. This classification means that the principles applicable to property transactions also pertain to transactions involving crypto. Additionally, a court in China has recognized cryptocurrencies as property. In 2019, a ruling by the Hangzhou Internet Court acknowledged Bitcoin as legally recognized digital property.
This is an evolving story, and more information will be provided as it becomes available.
