Despite a sweeping cryptocurrency ban imposed by Beijing in 2021, a Chinese People's Court has declared that virtual assets retain legal property status and are protected by the law. This significant development underscores a contrasting stance taken by the Chinese legal system, which acknowledges the property rights associated with virtual assets, even as the national policy remains hostile to cryptocurrencies.
In a notable decision, a People's Court in China has affirmed the legal property status of virtual assets, defying the cryptocurrency ban imposed by Beijing in 2021. The court's published report explores the criminal law attributes of virtual assets and asserts that, within the current legal policy framework, these digital assets retain their status as legal property, deserving protection under the law.
China's People's Courts operate independently and exercise judicial authority without interference from administrative or public organizations. These courts handle a wide range of cases, including criminal, civil, administrative, and economic disputes.
The report, titled "Identification of the Property Attributes of Virtual Currency and Disposal of Property Involved in the Case," recognizes the economic attributes of virtual assets, thereby classifying them as property. While China has declared all foreign digital assets illegal through its blanket ban, the report argues that virtual assets held by individuals should be regarded as legal property and be afforded legal protection within the existing policy framework.
Furthermore, the report offers suggestions for dealing with crimes involving virtual assets. It notes that since money and property associated with such cases cannot be confiscated, a unified approach combining criminal and civil law should be adopted. This approach aims to strike a balance between safeguarding personal property rights and serving broader social and public interests.
The Chinese government's stance on cryptocurrencies has been historically hostile, culminating in a comprehensive ban on crypto-related activities and foreign crypto exchanges serving mainland customers. However, the country's judicial system has adopted a more nuanced perspective on digital assets over the years.
The divergence between national policy and the legal recognition of property rights associated with virtual assets became apparent in September 2022 when a lawyer suggested that Chinese crypto holders are protected by the law in cases of theft, misappropriation, or breach of loan agreements, despite the crypto ban. In May 2022, a Shanghai court affirmed that Bitcoin qualifies as virtual property and is subject to property rights.
China's evolving approach to Bitcoin and cryptocurrencies reflects a potential softening of its stance. This transformation is exemplified by the resurgence of China's Bitcoin mining share, which dropped to zero following the blanket ban but reclaimed the second position within a year. These developments underscore the complex and evolving landscape of cryptocurrency regulation in China.
(PRASHANT JHA, CoinTelegraph, 2023)