HONG KONG SAR, CHINA Law and Practice Contributed by: Pang Lee, Joyce Wang, Mark Liang and Francis Li, Cooley
standard corporate insolvency recovery mechanisms. Building upon this, the further decision in Re Gatecoin Limited ( in liquidation ) [2025] HKCFI 493 clarified the distribution of recovered crypto-assets and confirmed the return of constructive trust assets to beneficiaries, emphasising the role of contractual terms in determin- ing insolvency priority. As crypto-assets are recognised as property, the approach to enforcing property rights over them involves adapting established equitable and com- mon law remedies directly to digital frameworks. Courts regularly grant interlocutory proprietary injunc- tions and freezing orders over cryptocurrencies. In a groundbreaking technological and judicial develop- ment, the High Court in Worldwide A - Plus Investments Ltd v A - Plus Meta Technology Ltd [HCA 2417/2024] granted leave to mint first blockchain-native tokenised injunction order globally. The court deployed a freez- ing order directly onto the Tron blockchain to restrict suspect wallets. This demonstrates that while the fundamental property rights are identical to those of tangible assets, the enforcement mechanisms are evolving to leverage the unique transparency and programmable nature of the technology itself. Transfer in Ownership The transfer in ownership of crypto-assets is deter- mined primarily by the functional control evidenced by the exclusive possession of a private cryptographic key associated with that specific asset. The execution of a digital signature authorising a transfer, followed by the network’s verification and recording of that trans- action on the distributed ledger, updates the definitive There are specific, complex legal and regulatory issues relating to the use of digital assets in collat- eral arrangements. Establishing a perfected security interest is challenging due to the intangible nature of the assets and the technical nuances of blockchain finality. Furthermore, inherent price volatility requires highly sophisticated valuation methodologies. To inte- grate margin trading safely into the regulated sector, the SFC issued a seminal circular on 11 February 2026 (“Circular on licensed corporations providing VA dealing services to offer financing for VA dealing and legal ownership status. Collateral Arrangements
access to shared order book, and to safeguard client VAs relating to withdrawals”), permitting licensed VA brokers operating under omnibus accounts to offer VA margin financing to their securities margin clients. To mitigate volatility and systemic risk, this frame- work mandates that only the most highly liquid digital assets (currently restricted to Bitcoin and Ethereum) are eligible as collateral, subject to a stringent mini- mum 60% valuation haircut. Brokers must implement real-time collateral monitoring systems and are strictly prohibited from engaging in the rehypothecation of client VA collateral, ensuring assets remain fully avail- able for redemption. 1.2.2 Access to Banking There are no statutory restrictions prohibiting firms that provide crypto-asset services from partnering with general banking and payment providers in Hong Kong. The HKMA has consistently issued explicit guid- ance mandating that authorised institutions adopt a risk-based approach rather than enforcing wholesale de-risking policies that categorically deny services to the digital asset sector. However, obstacles and commercial friction persist regarding access to banking services. These challeng- es stem predominantly from the exhaustive enhanced due diligence (EDD) required by traditional financial institutions to satisfy their internal AML/CFT obliga- tions. Banks must forensically assess the crypto firm’s transaction monitoring systems, source of wealth ver- ifications, blockchain analytics tools and regulatory licensing status. Protracted delays in account opening are common as banks conduct these complex risk assessments. Nev- ertheless, as the SFC and the HKMA have finalised and expanded their comprehensive licensing regimes through 2025 and 2026, the resulting regulatory clar- ity has improved institutional banking access for fully
compliant, licensed operators. 1.2.3 ESG/Sustainable Finance
ESG and sustainable finance requirements are increasingly applicable to digital assets and the firms that operate them in Hong Kong. The Hong Kong Exchanges and Clearing has implemented sweeping
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