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It came as a surprise when many posts went viral that China have officially declared virtual currencies like Bitcoin and Ethereum as legally protected properties. However the proactive crypto media and crytoverse just overreacted to the pseudo chinese media. While the news wasn't a counterfeit, the implication it had on the crypto markets were meagre.
The source of the News
The declaration for virtual currencies as legal property was outlined in a report titled "Identification of the Property Attributes of Virtual Currency and Disposal of Property Involved in the Case" published by the People's Court in China. ??
Is the Landscape of Crypto changing in China?
China's relationship with cryptocurrencies has been complex and ever-changing. In 2021, Beijing implemented a widespread ban on cryptocurrencies, leading to the closure of local exchanges and restrictions on crypto-related activities. However Chinese courts have taken a sympathetic approach towards Bitcoin and Ethereum in recent years.
The report from the People's Court in China emphasized that virtual assets, including Bitcoin and Ethereum, possess economic attributes and can be classified as legal property. This classification grants them protection under existing property laws in the country.
The court further argued that individuals who hold these virtual assets should enjoy legal protection and be entitled to the rights associated with property ownership.
The recognition of Bitcoin and Ethereum as legal property is a significant departure from the strict ban imposed by Beijing. It underscores the complexity of China's approach to digital assets. The courts have definitely taken a more nuanced view compared to the government's blanket ban.
The report also highlighted the need to address crimes involving virtual assets. As these assets cannot be confiscated, the court suggested treating such cases separately and finding a balance between protecting personal property rights and upholding social and public interests.
Furthermore, this approach for cryptocurrencies reflects the court's recognition of the importance of safeguarding individual rights while maintaining law and order in the space of virtual assets.
Contrasting Stances on Digital Assets
China's courts have consistently displayed a contrasting stance towards digital assets compared to the government's ban. The discrepancy creates a complex regulatory landscape that requires careful navigation for individuals and businesses operating in crypto and blockchain in China.
Such a divergence first became apparent in September 2022 when a lawyer argued that crypto holders in China are protected by the law in case of theft or breach of a loan agreement. This assertion contradicted the ban on cryptocurrencies and demonstrated the courts' willingness to interpret existing laws in favor of crypto holders.
In May 2022, a Shanghai court further solidified the legal recognition of Bitcoin by affirming that it qualifies as property subject to property rights. These legal precedents by Chinese courts have infused a glimmer of hope in crypto enthusiasts in the country and signaling a potential shift in the government's stance in future.
Key Takeaways
- The article in the newspaper of People's Court shows a softening tone for crypto inside China's authoritarian government. If not for the softening tone, the Chinese government wouldn't have let the article printed.
- The court's recognition of Bitcoin and Ethereum as legal property aligns with the global trend of increasing regulatory clarity and acceptance of digital assets.
- The People's Court in China have tried to establish a view that virtual currencies should have seperate law so as to safeguard individual rights and public interest.
- The declaration may have positive implications for cryptocurrencies and their legal status in China, leading to potential revisions in the country's regulatory approach.
- However, it remains to be seen how the totalitarian government respond to the courts' message and whether it will have any impact on the blanket ban for cryptocurrencies in China.
