In a recent ruling, a Hong Kong court has declared cryptocurrency to be property. This decision gives legal recognition to digital assets in the country and opens up new avenues for investors and businesses to use cryptocurrency in various transactions. The court’s decision is expected to have a significant impact on the crypto industry in Hong Kong and may serve as a precedent for other jurisdictions around the world. With this new ruling, it is likely that we will see an increase in crypto investment and adoption in Hong Kong.
Hong Kong’s High Court declares crypto as property that can be held in trust, marking the first time such a decision has been made in the city-state. The ruling puts crypto on par with other intangible assets such as stocks and bonds. The judgment found that crypto “inherently” has all the attributes of property, making it capable of forming the subject matter of a trust. This is in sharp contrast to the status of crypto-assets in the United States, which remains ambiguous. The Securities and Exchange Commission (SEC) views most crypto-assets (except for Bitcoin) as securities, whereas the Commodity Futures and Trading Commission (CFTC) considers Bitcoin and Ether commodities.
The situation in Europe is different. On April 20th, the lawmakers of the European Union approved Markets in Crypto Act (MiCA), the world’s first comprehensive framework for crypto. The legislation aims to reduce the risks for consumers in purchasing crypto assets by holding service providers responsible if they lose investor funds. MiCA also introduces several requirements on crypto platforms, token issuers, and traders around transparency, disclosure, authorization, and supervision of transactions.
In contrast, the US is yet to deliver a comprehensive regulatory framework. Several US-based crypto businesses are focusing on moving operations abroad as the war on crypto continues. Earlier this week, Coinbase announced considering moving to a friendlier jurisdiction, and the Winklevoss twins’ led crypto exchange Gemini revealed expanding its global engineering and operations teams to India.
The High Court’s ruling in Hong Kong is a significant milestone in recognizing the legitimacy of cryptocurrencies and their position within the legal system. With regulations becoming more defined, cryptocurrency firms can look forward to a future with greater clarity and legal recognition. As the rest of the world moves ahead with comprehensive regulatory frameworks, the US will need to establish a clear and consistent approach to stay competitive in the crypto industry.