Perspectives and insights from Mayer Brown lawyers and other thought leaders that touch on digital assets, decentralized finance, cryptocurrencies and related fields.
Shopping for Distressed Crypto Assets or Troubled Crypto Businesses? Don’t Leave Home Without This Roadmap
Investing in or acquiring distressed assets can be a lucrative investment strategy for those with a healthy risk appetite and a roadmap for sourcing and evaluating quality assets. For crypto assets and crypto-adjacent businesses, market conditions have resulted in deeply distressed valuations, liquidity crunches and insolvency or bankruptcy proceedings. Opportunities to invest in or acquire these types of assets will present a significant opportunity for those that can navigate the processes, appropriately price the assets and mitigate risk in the businesses themselves. In this piece, members of Mayer Brown’s Digital Assets, EC/VC and Restructuring groups describe three contexts in which these investments can be made: a “down round” of financing by a business, a secondary sale of an investment position, and asset sales in distressed situations either prior to or as part of a bankruptcy proceeding.
Hong Kong SFC Concludes Consultation on Regulation of Virtual Asset Trading Platforms
The Securities and Futures Commission of Hong Kong released the "Consultation Conclusions on the Proposed Regulatory Requirements for Virtual Asset Trading Platform Operators Licensed by the Securities and Futures Commission" (Consultation Conclusions) on May 23, 2023. In this Legal Update, we summarize the key takeaways related to license and dual licenses requirements, implementation timeline, retail access to licensed VATPs, AML/CFT matters, and other aspects of the regulatory requirements.
HKMA Commences e-HKD Pilot Programme
The Hong Kong Monetary Authority (HKMA) commenced its e-HKD Pilot Programme for a retail central bank digital currency (CBDC) on May 18, 2023. As part of its “Fintech 2025” strategy to future-proof Hong Kong in terms of CBDC/e-HKD readiness, the initiative launched with the announcement that 16 firms from the financial, payment and technology sectors have been selected to participate in the first round of pilots for 2023. The HKMA also announced plans to establish a CBDC Expert Group exploring key CBDC policy and technical issues including privacy protection, cybersecurity and interoperability.
Trust in the Crypto-verse: Cryptocurrencies as a Type of Property in Hong Kong
The emergence of cryptocurrency as an investment asset, alongside the proliferation of blockchain technology, has raised important legal questions, particularly regarding the legal status of cryptocurrency. Jurisdictions like Hong Kong have grappled with defining the legal nature of cryptocurrency, though a landmark decision has shed new light on the matter. On March 31, 2023, Justice Linda Chan in Re Gatecoin Limited [2023] HKCFI 91 (“Re Gatecoin”) held that cryptocurrency exhibits all the characteristics of property and could therefore be held on trust in the context of a liquidation (although it was ultimately found that the cryptocurrencies in question were not held on trust). In this Legal Update, we look at the key considerations underpinning the decision in Re Gatecoin.
