Hong Kong Court Recognizes Crypto as Property

Hong Kong Court Recognizes Crypto as Property

by | Apr 19, 2023 | Crypto Blog

 

Recently, a Hong Kong court ruled that cryptocurrency is considered property and can be held on trust. This decision, which involved the now-defunct crypto exchange Gatecoin, has significant implications for the crypto industry, particularly in terms of regulation and asset classification.

According to CoinDesk, the ruling was made by Justice Linda Chan, who stated that Hong Kong's definition of "property" is broad and intended to have a wide meaning. This ruling is in line with similar decisions in Mainland China and the US, where the Internal Revenue Service (IRS) treats crypto as property for tax purposes. Moreover, a government-funded law commission in the UK has determined that crypto can be classified as a new type of property under existing laws in England and Wales.

In 2019, Gatecoin announced that it would shut down and begin liquidation after attempting to recover disputed funds from a former payment services provider. The liquidators sought guidance from the court on how to treat the crypto held by Gatecoin, which amounted to over 140 million Hong Kong dollars ($17.8 million) in October 2022.

 

While the court found that cryptocurrencies can form the subject matter of a trust, it determined that a trust had not been established in this particular case. This ruling provides greater clarity for Hong Kong liquidators on how to treat crypto assets held by companies during wind-down procedures.

As Hong Kong continues to push for clearer regulations in the crypto sector, brokerage firm Bernstein has noted that the jurisdiction's approach to regulating crypto could attract capital amid global regulatory uncertainty.

 

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Singapore Authorities Collaborate with Local Banks to Establish Unified Crypto Standards

Singapore Authorities Collaborate with Local Banks to Establish Unified Crypto Standards

by | Apr 6, 2023 | Crypto Blog

 

Singapore's central bank, the Monetary Authority of Singapore (MAS), is reportedly working closely with local banks to develop unified standards for evaluating potential clients in the cryptocurrency and digital assets sector. This initiative aims to streamline the account-opening process for digital asset service providers and facilitate better cooperation between banks and the crypto industry.

The project, which has been ongoing for approximately six months, is expected to produce a report outlining best practices in due diligence and risk management within the next two months. According to insiders, the guidelines will apply to companies providing payment, trading, and transfer services for assets such as stablecoins and non-fungible tokens (NFTs).

Despite the establishment of these unified standards, individual banks will still be able to decide whether or not to accept clients based on their risk appetites. Many traditional banks have been hesitant to engage with the crypto industry due to concerns surrounding price volatility and potential regulatory issues. Failures of prominent players like Terraform Labs and FTX have exacerbated these concerns.

The closures of Silvergate Bank and Signature Bank, both of which were known for their crypto-friendly policies, have put further pressure on crypto companies to seek new banking partnerships. The MAS has emphasized that there are no regulations prohibiting Singapore banks from working with crypto or other digital asset companies.

Ultimately, banks will have to find a balance between commercial considerations and business risk tolerance when deciding whether to initiate or maintain relationships with specific crypto-related firms. Singapore authorities have already introduced a licensing system to regulate the crypto industry, and stricter regulations for individual investors' crypto transactions are being considered following market disruptions caused by companies such as Terraform Labs and Three Arrows Capital (3AC).

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