Hong Kong Court Recognizes Crypto as Property

Crypto has been classed as property in Hong Kong during a case regarding digital assets still held by defunct exchange Gatecoin


zhu difeng/Shutterstock, modified by Blockworks


Hong Kong’s High Court has deemed crypto to be property, marking the first time such a decision regarding digital assets has been made in the city-state.

The landmark ruling was handed down in a legal matter involving Gatecoin Limited, a crypto exchange that operated domestically from January 2015 until its demise four years later.

Gatecoin (not to be confused with Gate.io) had been instructed to cease operations and undergo liquidation after failing to retrieve funds lost in a disagreement with a payment services provider.

Following its closure in March 2019, Gatecoin’s liquidators sought court guidance on whether the crypto still held by Gatecoin belonged to customers “on trust” or could be made available to general creditors.

On trust refers to crypto held for the benefit of specific customers in the event of liquidation. In Gatecoin’s case, the crypto would be in a fiduciary capacity where the exchange is responsible for the custody and management before being returned.

While Justice Linda Chan determined that creditors’ funds on the exchange weren’t held on trust, her ruling found that crypto inherently has all the qualities of property, per domestic law firm Hogan Lovells.

Chan’s ruling also means crypto is legally capable of being held on trust, Hogan Lovells added.

Hong Kong’s definition of “property” is inclusive and intended to have a wide meaning, Chan reportedly said following the handing down of her ruling.

“The confirmation that holdings of cryptocurrencies constitute ‘property’ that is on a par with other intangible assets such as stocks and shares, brings Hong Kong into line with other common law jurisdictions,” Hogan Lovells said.

The US Internal Revenue Service also considers crypto to be property, although other regulatory agencies classify it differently according to their purview (the Securities and Exchange Commission considers many to be securities while the Financial Crimes Enforcement Network instead treats companies handling digital assets as “money transmitters”).

Hong Kong’s property ruling, meanwhile, comes as the city-state aims to revive its image as a digital assets hub.

Clara Chan, Hong Kong central bank executive director, said during the region’s recent Web3 Festival conference: “We don’t want to stifle financial innovation but level the playing field among participants to unlock the potential for the industry. We look forward to harnessing Web3 for the force of good.”

Don’t miss the next big story – join our free daily newsletter.


Upcoming Events

Salt Lake City, UT

WED - FRI, OCTOBER 9 - 11, 2024

Pack your bags, anon — we’re heading west! Join us in the beautiful Salt Lake City for the third installment of Permissionless. Come for the alpha, stay for the fresh air. Permissionless III promises unforgettable panels, killer networking opportunities, and mountains […]

recent research

ao cover.jpg


Arweave recently launched the testnet for AO computer, a new messaging protocol that will sit atop a PoS network and aims to become a scalable global compute platform through parallel processing and modularity.


Ore’s price more than tripled as the supply of new tokens paused


I spend an unhealthy amount of time thinking about crypto securities law — and I can’t see how ETH is now a securities offering under Howey


Regulators in South Korea, Japan and Singapore could follow Hong Kong’s lead as Asia responds to spot bitcoin ETF approval in the US


Martin Grant worked with the Fed for roughly 30 years before leaving his position in 2022


BitGo CEO Mike Belshe shared his thoughts on the halving and bitcoin ETFs in an interview with Blockworks


Crypto markets were largely the only ones open over a tense weekend, and they took a beating for it