A Hong Kong court has recognized cryptocurrencies as fiduciary assets in a ruling relating to the defunct Gatecoin cryptocurrency exchange.
In a report published by the law firm Hogan Lovells, Judge Linda Chan affirmed that cryptocurrencies have the attributes of property. The court found it appropriate to follow the reasoning applied by other jurisdictions that cryptocurrencies were property and could be held in trust. Chan noted:
“Like other common law jurisdictions, our definition of ‘property’ is inclusive and intended to have a broad meaning.”
According to Hogan Lovells, the new ruling may give Hong Kong insolvency professionals greater clarity in terms of digital assets. The confirmation that cryptocurrencies constitute property similar to other assets, such as shares, aligns Hong Kong with other jurisdictions.
In the United States Internal Revenue Service (IRS), cryptocurrencies are recognized as property for federal tax purposes. This means that the principles that apply to property transactions apply to transactions using cryptocurrency. Meanwhile, a court has also recognized cryptocurrencies as property in China. Back in 2019, a decision made by the Hangzhou Internet Court legally recognized Bitcoin as digital property.
This is a developing story, and more information will be added as it becomes available.
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