Site icon Crypto Academy

Hong Kong Court Declares Crypto to be Property in New Ruling

Hong Kong Court Declares Crypto to be Property in New Ruling

Hong Kong’s High Court has issued a landmark ruling declaring cryptocurrencies to be a form of property that can be held in trust. The decision puts crypto on par with other intangible assets like stocks and bonds and marks the first time a decision of this kind has been made in the city-state.

The ruling was issued in liquidating a case involving the now-defunct crypto exchange Gatecoin. The judgment was revealed by London-based law firm Hogan Lovells, which stated that Justice Linda Chan, who presided over the Gatecoin case, found that crypto “inherently” has all the attributes of the property.

The court applied the reasoning adopted in other jurisdictions that cryptocurrency is “property” and is capable of forming the subject matter of a trust. The decision is significant as it provides clarity and certainty for individuals and businesses dealing with cryptocurrencies in Hong Kong.

Contrast With the United States

The Hong Kong court’s decision starkly contrasts the status of crypto-assets in the United States, which remains ambiguous. The Securities and Exchange Commission (SEC) views most crypto assets (except for Bitcoin) as securities, while the Commodity Futures and Trading Commission (CFTC) considers Bitcoin and Ether to be commodities.

This lack of clarity has caused considerable confusion for crypto businesses operating in the US. Many are focusing on moving operations abroad, and some, like Coinbase and Gemini, have announced plans to expand their global engineering and operations teams to friendlier jurisdictions like India.

Europe Takes the Lead in Crypto Regulation

On April 20th, the European Union lawmakers approved the world’s first comprehensive framework for crypto – Markets in Crypto Act (MiCA). The legislation seeks to reduce risks for consumers purchasing crypto assets by holding service providers responsible if they lose investor funds.

MiCA also introduces several requirements on crypto platforms, token issuers, and traders around transparency, disclosure, authorization, and supervision of transactions. The comprehensive regulatory framework provides much-needed clarity for the crypto industry in Europe.

US Regulators Must Act

The lack of regulatory clarity around cryptocurrencies in the US has caused concern among investors and businesses alike. The Hong Kong court’s decision and the introduction of MiCA highlight the need for regulators in the US to act quickly and clarify cryptocurrencies’ status.

The Hong Kong court’s decision to declare cryptocurrencies as property provides clarity and certainty for individuals and businesses dealing with cryptocurrencies in the city-state. It is a significant step forward for the industry, which has faced considerable confusion and uncertainty in other jurisdictions like the US.

With the introduction of MiCA, Europe has taken the lead in providing a comprehensive regulatory framework for cryptocurrencies. US regulators must act quickly to provide clarity and avoid falling behind in the development of this innovative technology.

Exit mobile version