Legal regulation of virtual assets in the Hong Kong Special Administrative Region of the PRC

Abstract

The article is devoted to the study of the current legal regulation of virtual assets in the Hong Kong Special Administrative Region of the People’s Republic of China. The author analyses the advantages and disadvantages of the relevant legal framework, as well as the possibility and feasibility of implementing the most successful solutions into Ukrainian legislation.
 Due to the lack of in-depth studies that would combine the main regulatory norms and definitions and provide a general overview of this regulatory system, it became necessary to study in detail the current legal system of the Hong Kong Special Administrative Region of the People’s Republic of China, which is characterised by high autonomy from the rest of the PRC, and to identify the institutions that perform the functions of a regulator of virtual assets.
 Next, the author provide a legislative definition of virtual assets and their classification. Unlike other jurisdictions, the Hong Kong Special Administrative Region of the PRC focuses on the key features inherent in this particular object of civil rights, and excludes from the definition other objects that have similar features but are already regulated separately.
 The common law system makes it possible to regulate certain aspects of the circulation of virtual assets through precedents, which helps to quickly adapt to changes in this market, where new concepts and civil law relations emerge every few years. For example, it was through precedent that it was determined that cryptocurrencies are property and can therefore be the subject of a trust.
 Currently, not all objects created on the basis of blockchain technology are subject to regulation, such as non-fungible tokens or central bank digital currencies, as the possibility of their circulation is still being investigated by the Hong Kong Monetary Authority.
 The article also examines the new nuances of licensing service providers related to the circulation of virtual assets, which require dual licensing under two regimes regulated by separate legal acts.
 The author concludes that Hong Kong has managed to regulate the circulation of virtual assets in one way or another, but has not managed to create a clear system for all market participants, so it is possible to introduce some solutions into Ukrainian legislation, but in general, this legal regulation system has many disadvantages and sometimes creates legal uncertainty.