Judicial assistance between the Mainland and Hong Kong is gradually strengthened to provide judicial relief for Web3

Source: Lawyer Jin Jianzhi

Recently, according to the Supreme People's Court, the "Arrangement on the Mutual Recognition and Enforcement of Judgments in Civil and Commercial Cases between the Mainland and Hong Kong Special Administrative Region Courts" has been implemented on January 29, 2024. . Meanwhile, on January 1, 2024, a new tax reporting law has taken effect in the United States. All Americans who receive $10,000 or more in cryptocurrency in the course of trade or business must submit it to the Internal Revenue Service (IRS) within 15 days. Report.

When virtual assets gradually become compliant, the hot market needs "cold thinking", and government supervision is a topic that cannot be avoided.  

01 "Cross-border enforcement difficulties" are gradually resolved

< p>The mainland and Hong Kong have a long history of judicial assistance. The implementation of the Arrangement on Mutual Recognition and Enforcement of Judgments in Civil and Commercial Cases between the Courts of the Mainland and the Hong Kong Special Administrative Region means that the two sides of the Taiwan Strait have started from the initial service of documents, extraction of evidence to mutual The scope of recognition and enforcement of arbitral awards and judgments is becoming wider and wider, and the problem of "difficulty in cross-border enforcement" is gradually being resolved.

The legal gap between the mainland and Hong Kong mainly comes from the differences in the legal systems of the two sides. In this regard, Lawyer Jin pointed out that the mainland of China adopts the civil law system, while Hong Kong adopts the common law system. The common law system mainly forms law through case law (precedent). When hearing cases, judges will refer to previous precedents to decide similar situations; civil law systems are usually based on codes, which are systematically codified legal documents that specify legal provisions in detail. Judges usually pay more attention to following and enforcing the code.

02  Mutual recognition and enforcement of civil and commercial judgments

Hong Kong and the Mainland have a relatively long judicial history in civil and commercial judgments. Assist history. In fact, before the “new arrangement”, there was actually the “Arrangement Concerning the Mutual Recognition and Enforcement of Judgments in Civil and Commercial Cases in which the Courts of the Mainland and the Hong Kong Special Administrative Region Have Jurisdiction Agreement between the Parties” (the “2008 Arrangement”). The main change in the "new arrangement" compared to the 2008 arrangement is that mutual recognition of civil and commercial judgments between the two places will no longer be restricted by the original "exclusive jurisdiction agreement", and at the same time, applicable judgment agreements have been added.

Lawyer Jin said that the Chinese are actually the most active in Hong Kong’s web3 industry. The judicial attitude of the Hong Kong judiciary towards virtual currencies is predictable, and as mutual enforcement of civil and commercial judgments and arbitration awards between the two places becomes more convenient, after a successful judgment or award is obtained in Hong Kong for currency-related disputes, according to relevant judicial assistance arrangements, It can also seek enforcement in mainland courts, increasing judicial relief channels for the Hong Kong web3 industry.

03 Tax supervision is an important part of the compliance process

On January 10, U.S. time, U.S. Securities The Exchange Commission (SEC) announced the approval of Bitcoin spot ETFs and authorized 11 ETFs to begin trading on Thursday local time. Since ETFs are securities, they are subject to the supervision of U.S. federal securities laws such as the Securities Act of 1933 and the Securities Exchange Act of 1934. Attorney Jin believes that as long as they are U.S. tax residents, investors purchasing Bitcoin ETFs will still be involved in capital gains tax and therefore need to comply with U.S. tax regulations.

04 Future regulatory direction

Recently, important progress has been made in the revision of China’s anti-money laundering law. On January 22, 2024, Prime Minister Li Qiang chaired an executive meeting of the State Council to discuss the "Anti-Money Laundering Law of the People's Republic of China (Revised Draft)" (referred to as: revised draft). According to the legislative plan, the revised draft is expected to be passed in 2025. Among them, the draft amendment to the Anti-Money Laundering Law already covers dealing with new money laundering risks, requiring financial institutions to assess money laundering risks and take risk management measures before adopting new technologies and providing new products.

As for the future regulatory directions of the two places, Lawyer Jin believes that in the short term, some policies of Hong Kong and the United States may undergo drastic changes, but in the long term, the future trends of the two places are consistent. Yes, virtual assets will be regulated in a more compliant direction like other assets.

Note: The content of this article is compiled from DeThings interview script