Crypto is finally confirmed as Property in Hong Kong!
Cryptocurrency was finally and officially recognised as a kind of property in Hong Kong, in the recent landmark case of Re Gatecoin Ltd [2023] HKCFI 914.
Gatecoin operated a cryptocurrency exchange platform since 2015 through which it provided services to the customers. There were more than 45 types of cryptocurrencies trading carried on through the platform. In addition, Gatcoin also engaged in trading of cryptocurrencies in its own right including trading with its customers. Other than the Platform, Gatecoin did not operate its business in any other form. Gatecoin was wound up by the court in 2019, and liquidators were appointed.
A question before the court was whether cryptocurrency was a class of property in Hong Kong. In deciding this question, the court first of all looked at s.3 of the Interpretation and General Clauses Ordinance, which provided little clue. The court finally relied on a New Zealand case where it was ruled that cryptocurrency was a type of intangible property as it satisfied the four fundamental elements of being a property, i.e. (1) definable, (2) identifiable by third parties, (3) capable of assumption by third parties and (4) having some degree of permanence and stability. Applying these four criteria to Gatecoin, the Hong Kong court had no difficulty in concluding that cryptocurrency was a “property”.
The immediate consequence of this ruling is that cryptocurrencies being “property” under Hong Kong law are capable of being held for distribution to creditors, or their beneficiaries if they were trust assets, for the purposes of administering an insolvent estate.
