Hong Kong Court deemed crypto to be property – 1st time a decision regarding crypto has been made in the city

In Hong Kong, cryptocurrency was classified as property during a case involving digital assets still held by the defunct exchange Gatecoin. The historic decision was made in a case involving Gatecoin Ltd, a local cryptocurrency exchange, from January 2015 until its closure four years later.

Gatecoin (not to be confused with Gate.io) was given the order to discontinue operations and go through liquidation after failing to recover money misplaced during a dispute with a payment services supplier.


As Gatecoin was shut down in March 2019, its liquidators asked the court for advice on whether the cryptocurrency it still had belonged to clients “on trust” or might be distributed to general creditors.

In the event of liquidation, cryptocurrency kept on trust is held for the advantage of certain clients. In the case of Gatecoin, the cryptocurrency would be held in a fiduciary capacity, with the exchange in charge of custody and management before its release.

According to domestic law firm Hogan Lovells, Justice Linda Chan stated that cryptocurrency inherently possesses all property characteristics even if she found that the monies held by creditors on the exchange were not held on trust.

According to Hogan Lovells, Chan’s decision also establishes the legitimacy of holding cryptocurrency on trust. Following the announcement of her decision, Chan reportedly stated that Hong Kong’s definition of “property” is inclusive and meant to have a broad connotation. “The confirmation that holdings of cryptocurrencies constitute ‘property’ that is on a par with other intangible assets such as stocks and shares, brings Hong Kong into line with other common law jurisdictions,” Hogan Lovells said.

Although other regulatory bodies categorize cryptocurrencies differently depending on their areas of responsibility (the Securities and Exchange Commission classifies many as securities while the Financial Crimes Enforcement Network treats businesses that handle digital assets as “money transmitters”), the US Internal Revenue Service also views cryptocurrencies as property.

However, Hong Kong’s property judgment comes as the city-state works to restore its reputation as a center for digital assets. While speaking at the recent Web3 Festival conference in the area, Clara Chan, the Hong Kong central bank executive director, said: “We don’t want to stifle financial innovation but level the playing field among participants to unlock the potential for the industry. We look forward to harnessing Web3 for the force of good.”

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