The Hong Kong legal and justice system has made a landmark ruling by recognizing cryptocurrency as property that can be “held on trust.”
The decision was reached in a lawsuit involving the now-defunct crypto exchange Gatecoin.
According to the law firm Hogan Lovells — which reported the case on April 18 — Justice Linda Chan presided over the case and declared that Hong Kong defines “property” broadly, with a wide meaning that encompasses cryptocurrencies.
The ruling is in line with similar decisions made in mainland China and the U.K. The U.S. Internal Revenue Service (IRS) also treats cryptocurrencies as property for tax purposes.
In the U.K., a government-funded law commission found that cryptocurrency can be classified as a new type of property under existing laws in England and Wales.
Gatecoin case sets
Gatecoin announced its shutdown and liquidation in 2019 following an attempt to recover disputed funds from a former payment services provider.
Liquidators sought directions from the court on whether the crypto held by Gatecoin should be treated as property held on trust or if it should be made available to the general body of creditors, according to the Hogan Lovells report. The exchange held crypto valued at more than $17.8 million in October 2022.
Although the court acknowledged that cryptocurrencies could be held in trust, it ultimately determined that a trust had not been established in the Gatecoin case.
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