Hong Kong has classified cryptocurrencies as property during the case proceedings for a defunct exchange called Gatecoin. The high court of Hong Kong has recently issued a new decree concerning a new decision on the matter of digital assets.
The legal authority has recently issued an important ruling that was related to the handling of ownership of Gatecoin Limited. This cryptocurrency exchange was operational since 2015.
However, the enterprise became defunct during the last 4 years. The product should not be compared with Gatecoin.io. To this end, the court has issued an order to halt the operations and precede liquidation.
The liquidation was caused by failure to retrieve the lost funds during a disagreement happening with the payment services company.
The Legal Status of Gatecoin’s Stakeholders
Gatecoin stakeholders are currently awaiting a verdict from the court of law about whether the ownership of the firm should remain with its users based on trust. In the other scenario, it will be transferred to general creditors.
In the case of a trust, the specified stakeholders will be able to maintain the benefits in case of any liquidation. Gatecoin maintains that crypto is going to keep operating as a trust where the exchange will be able to offer custodial and management services.
Justice Linda Chan has assured that creditor funds on the exchange were not stored in the trust. Therefore, she has maintained that cryptocurrencies garner all the qualities of a property under the guidance of a domestic law firm named Hogan Lovells.
To this end, the judge also maintained that this quantity of crypto could remain legally as trust.
A judge in this case has maintained that the legal definition of property in the country is inclusive and intended for wider meaning. She has also claimed that cryptocurrency holdings constitute property that is on par with other intangible assets such as stocks and shares.
It means that Hong Kong can be brought within other common law jurisdictions. The Internal Revenue Service of the US has also considered crypto to be property.
However, other regulatory entities have classified crypto differently in their legal projections. Securities and Exchange Commission has considered it to be security while the Financial Crimes Enforcement Network has opted to treat it as monetary transmitter.
On the other hand, Hong Kong has suggested that the city should make an effort to review its image using as a commercial point for digital assets. Clara Chan, the executive director of Hong Kong Central Bank, has claimed that the institution does not intend to restrict financial innovation but allow new participants to participate in the sector.