SCMP features Padraig Walsh on Cryptocurrency is property in Hong Kong, court rules for the first time, bolstering city’s efforts to promote industry20Apr2023
A landmark court ruling recognising cryptocurrency assets as property has further boosted Hong Kong’s virtual asset industry, as the city takes steps to attract crypto firms in a bid to become a regional hub.
Cryptocurrencies constitute property, which can be put into a trust, Justice Linda Chan ruled on March 31 in a liquidation case involving now-defunct Hong Kong crypto exchange Gatecoin.
The judgment is the first time Hong Kong’s High Court has fully recognised such assets as property, a move that will bring certainty and confidence to related businesses in the city, lawyers say.
Prior to the judgment, cryptoassets were generally “believed” and “understood” to be property, but there was no legal justification or support for such a stance, said Padraig Walsh, partner at Hong Kong law firm Tanner De Witt.
“It’s moved from what you might say is a thesis to something that is actual law,” Walsh said. “It’s confirmed and is pretty much beyond doubt.”
The clarity will be helpful for a range of cryptocurrency-related issues that arise in respect to property, including devising trust arrangements and how the asset could be passed from the deceased to their beneficiaries, Walsh added.
The ruling, which puts cryptocurrency on par with other intangible assets like stocks and bonds, brings Hong Kong in line with other common law jurisdictions, where courts have already ruled on the issue, Hogan Lovells lawyers in Hong Kong wrote in a blog post published on Wednesday.
“It’s good for the Hong Kong courts,” Walsh said “It’s demonstrating to the legal community in the world that these are the kinds of issues that they can deal with.”
The ruling also further distinguishes Hong Kong from mainland China, where cryptocurrencies are not widely protected.
Disclaimer: This publication is general in nature and is not intended to constitute legal advice. You should seek professional advice before taking any action in relation to the matters dealt with in this publication.