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In a significant ruling, Hong Kong’s High Court has classified cryptocurrency as property that can be held in trust. This represents the first instance of such a determination regarding this asset class in the city-state.
The decision, which was issued in the liquidation proceedings of the now-defunct crypto exchange Gatecoin, effectively places cryptocurrency on the same level as other intangible assets like stocks and bonds.
Cryptocurrencies as Property
The judgment was disclosed by the London-based law firm Hogan Lovells earlier this week. The report indicated that Justice Linda Chan, who oversaw the Gatecoin case, concluded that cryptocurrency “inherently” possesses all the characteristics of property.
“Linda Chan J remarked that “similar to other common law jurisdictions, our definition of ‘property’ is broad and intended to encompass a wide meaning.” The court deemed it suitable to adopt and follow the reasoning established in other jurisdictions that cryptocurrency qualifies as “property” and can serve as the subject matter of a trust.”
This recent ruling sharply contrasts with the status of crypto-assets in the United States, where the situation remains unclear. A prominent government agency – the Securities and Exchange Commission (SEC) – regards most crypto assets (excluding Bitcoin) as securities, differing from the perspective of the Commodity Futures and Trading Commission (CFTC), which views Bitcoin and Ether as commodities.
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Global Regulations
On April 20th, European Union lawmakers approved the world’s first comprehensive regulatory framework for cryptocurrency – the Markets in Crypto Act (MiCA). This legislation aims to mitigate risks for consumers when purchasing crypto assets by holding service providers accountable for any loss of investor funds. MiCA also establishes various requirements for crypto platforms, token issuers, and traders concerning transparency, disclosure, authorization, and oversight of transactions.
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Conversely, the United States has yet to establish a comprehensive regulatory framework. As the conflict over cryptocurrency persists, several US-based crypto companies are looking to relocate their operations overseas. Earlier this week, Coinbase announced it is considering a move to a more favorable jurisdiction. The Winklevoss twins’-led crypto exchange Gemini also disclosed plans to expand its global engineering and operations teams to India.
Criticizing their US counterparts, Tyler Winklevoss tweeted,
“While US regulators have been preoccupied with internal disputes and failing to provide even the most basic clarity for the crypto industry, the European Union has just approved the MiCA regulation, which offers a comprehensive regulatory framework for crypto in Europe. It’s unfortunate to witness the US lagging behind on such a crucial technology and its potential.”
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