- Shanghai court’s 2017 ICO dispute resolution highlights complexities in China’s crypto regulatory environment.
- Bitcoin recognized as virtual commodity by Chinese court, possessing ‘property attributes’ but not currency status.
In a recent legal ruling in China, a judge has clarified that while owning cryptocurrencies like Bitcoin (BTC) is legally permissible, their use in transactions remains prohibited. This distinction highlights the complex legal surrounding digital currencies in the country.
The Shanghai Songjiang People’s Court’s Judge, Sun Jie, during a ruling on a commercial dispute from 2017 involving an Initial Coin Offering (ICO), emphasized that cryptocurrencies are recognized as commodities with “property attributes” rather than fiat currency. This ruling aligns with China’s nuanced position on digital assets, distinguishing between ownership and usage.
According to the South China Morning Post, this judgment sheds light on the permissible personal possession of cryptocurrencies under Chinese law.
While it is not illegal for individuals to simply hold virtual currencies, commercial entities cannot engage in investment transactions with those assets or even issue tokens on their own. – Judge Sun Jie
The judge articulated that while holding such digital assets isn’t illegal, their usage in transactions or investment activities by businesses remains strictly off-limits. This clarification came amidst a broader discourse on the legality of ICOs, which have been under stringent regulation since 2017.
The judge’s ruling came with a stern warning about the potential risks associated with owning cryptocurrencies, reflecting ongoing concerns among Chinese regulators about the disruptive potential of decentralized currencies to the existing financial order.
The warning underscored the risks of cryptocurrencies becoming tools for illegal activities such as money laundering and fraud, a stance that the Chinese government has maintained as it continues to uphold strict regulations on the economic activities surrounding crypto currencies.
The court’s decision also involved ordering a repayment of 250,000 yuan in a case where two companies were found to have engaged in illegal ICO activities, highlighting the government’s rigorous stance on unauthorized cryptocurrency transactions.
Despite the legal allowance for owning cryptocurrencies, Judge Sun’s remarks serve as a reminder of the extensive regulatory measures China has implemented over the years to control the proliferation and use of crypto assets.
From the initial restrictions placed on banks in 2013 to the sweeping bans on cryptocurrency exchanges and mining operations in recent years, the Chinese government has consistently tightened its policies in response to the perceived risks posed by cryptocurrencies to its financial system.
As BTC prices hover near the $100,000 mark, this ruling not only reaffirms the legality of cryptocurrency possession in China but also reflects the ongoing global dialogue about how to integrate these burgeoning digital assets within existing legal and economic frameworks.
