The decision aligns Hong Kong with other jurisdictions that recognizes cryptocurrencies as digital properties.
A court based in Hong Kong has acknowledged cryptocurrencies as property that can be held in trust in a ruling involving the defunct crypto exchange Gatecoin.
In a report published by the law firm Hogan Lovells, Justice Linda Chan said that crypto has the attributes of a property. The court deemed that it was appropriate to follow reasoning applied by other jurisdictions that crypto was property and was able to form the subject matter of trust. Chan noted:
"Like other common law jurisdictions, our definition of 'property' is an inclusive one and intended to have a wide meaning."
According to Hogan Lovells, the new ruling can potentially give insolvency practitioners in Hong Kong greater clarity in terms of digital assets. Confirming that crypto constitutes property that's similar to other assets like stocks aligns Hong Kong with other jurisdictions.
Related: IRS reminds taxpayers of crypto income reporting ahead of 2022 filing
In the United States Internal Revenue Service (IRS), cryptocurrencies are recognized as property for federal tax purposes. This means that principles that are applicable to property transactions apply to transactions using crypto. Meanwhile, a court has also recognized crypto as property in China. Back in 2019, a decision made by the Hangzhou Internet Court recognized Bitcoin legally as digital property.
This is a developing story, and further information will be added as it becomes available.
