- The Chinese government’s stance on cryptocurrency has been largely negative, due to concerns about volatility, use for illegal activities, and potential to undermine the country’s financial system.
- According to the court report, virtual assets in China are legal property due to their economic attributes.
- As China continues to adapt its legal framework, the protection and recognition of virtual assets within its borders will likely play a crucial role in shaping the future of digital finance in the country.
Virtual assets have become an integral part of the global financial landscape, with cryptocurrencies like Bitcoin gaining immense popularity. The legal status of these digital assets has been a subject of debate and uncertainty in many countries. In China, a recent report from People’s Court Daily, managed by the Supreme People’s Court, sheds light on the legal protection of cryptocurrency and virtual assets. This article delves into the key findings of the report, explores the role of the People’s Courts in China, and examines the evolving stance of Chinese authorities on virtual assets.
China cryptocurrency history
The Chinese government’s stance on cryptocurrency has been largely negative, due to concerns about its volatility, use for illegal activities, and potential to undermine the country’s financial system. The government’s crackdowns on cryptocurrency have had a significant impact on the industry, causing prices to plummet and miners to relocate to other countries.
2011: BTCC is founded by Bobby Lee and Allen Zhang. It is the first cryptocurrency exchange to be established in China.
2013: China becomes a major player in the cryptocurrency mining industry. The country has cheap electricity and a large pool of skilled engineers, making it an attractive place to mine cryptocurrency.
2017: China’s central bank, the People’s Bank of China (PBoC), bans financial institutions from providing services related to cryptocurrency. This includes providing loans, accepting deposits, and facilitating payments.
2019: China’s government cracks down on cryptocurrency exchanges and mining operations. The PBoC orders all cryptocurrency exchanges to close, and it bans banks from providing services to cryptocurrency businesses. The government also shuts down a number of mining operations.
2021: China’s government bans cryptocurrency trading and mining. The PBoC issues a statement declaring that all cryptocurrency transactions are illegal. This effectively shuts down the cryptocurrency market in China.
The Chinese government’s crackdown on cryptocurrency has been a major setback for the industry. However, it is possible that the government’s stance could change in the future. As the technology continues to develop, and as the regulatory landscape around the world becomes more clear, China may decide to adopt a more lenient approach to cryptocurrency.
Legal protection of virtual assets
The People’s Courts in China, operating independently in accordance with the Chinese constitution, play a pivotal role in upholding the rule of law within the nation. Among their responsibilities is ensuring the legal protection of virtual assets held by individuals. The recent report published by a People’s Court in China underscores the significance of this protection.
According to the report, virtual assets in China are legal property due to their economic attributes. This recognition is a crucial step in defining the rights and responsibilities associated with these digital assets. While the debate over the nature of cryptocurrencies continues worldwide, the People’s Courts have a clear stance: Virtual assets are legal property and should be protected as such.
Independence of the People’s Courts
One of the distinctive features of the People’s Courts in China is their independence from administrative or public organizations. This independence is enshrined in the Chinese constitution, emphasizing the importance of impartial and unbiased judicial decision-making. The People’s Courts handle a wide range of cases, including criminal, civil, administrative, and economic disputes.
In the context of virtual assets, this independence becomes particularly significant. It ensures that legal matters related to these assets are adjudicated without interference from administrative entities. This provides a fair and consistent legal framework for individuals involved in the virtual asset space.
Classification of virtual assets as legal property
The heart of the matter lies in the classification of virtual assets as legal property. The report explicitly acknowledges the economic attributes of virtual assets and asserts that they should be considered legal property. This classification holds even within the context of China’s stringent ban on foreign digital assets.
This stance by the People’s Courts offers a degree of legal clarity to individuals and businesses dealing with virtual assets in China. It reaffirms that these assets have a recognized status and should be afforded the same legal protections as traditional forms of property.
Addressing Crimes Involving Virtual Assets
The report also provides recommendations for dealing with crimes involving virtual assets, which are often challenging to confiscate or restore. To tackle these issues effectively, the report suggests a combination of criminal and civil laws. This approach aims to strike a balance between protecting personal property rights and safeguarding the broader public interest.
By proposing this dual-track approach, the People’s Courts are signaling their commitment to upholding the rule of law in the virtual asset space. This approach recognizes the complexity of virtual asset-related crimes and seeks to provide equitable solutions.
Recognition of Bitcoin and Digital Assets
Despite China’s blanket ban on cryptocurrency-related activities and foreign exchanges, the People’s Courts have taken a contrasting stance by recognizing Bitcoin and other digital assets as virtual property with associated property rights. This recognition came to the fore in September 2022 . A lawyer suggested that crypto holders in China are protected by the law in case of theft, misappropriation, or breach of a loan agreement.
Furthermore, in May 2022, a Shanghai court affirmed that Bitcoin qualifies as virtual property and is subject to property rights. These legal affirmations are significant steps toward acknowledging the legitimacy of cryptocurrencies within China’s legal framework.
Evolution of China’s Stance on Cryptocurrencies
China’s stance on cryptocurrencies has evolved over recent years. Initially marked by a blanket ban on crypto-related activities and foreign exchanges, the government’s position has gradually softened. This shift is evident from the resurgence of Bitcoin mining activity in the country.
Shortly after the initial ban, China’s Bitcoin mining share dropped to zero. However, within a year, it rose to take the second spot in global Bitcoin mining. This resurgence suggests that Chinese authorities are reevaluating their approach to cryptocurrencies. There is a possible recognition of their economic value and the potential benefits they can bring.
The report from People’s Court Daily and the stance of the People’s Courts in China represent significant developments in the legal landscape of virtual assets within the country. The recognition of virtual assets as legal property, the independence of the People’s Courts, and the evolving stance on cryptocurrencies indicate a willingness to adapt to the changing financial landscape.