Chinese Court Affirms Digital Assets as Legal Property Despite Government Ban

A recent report from a People’s Court in China has strengthened the argument that digital assets possess inherent economic value and maintain their status as legal property, despite the total ban on private cryptocurrencies imposed by the Chinese government in 2021. 

This unexpected stance shows the evolving nature of the relationship between China’s legal system and the rapidly changing world of crypto.

Court’s Stance on Digital Assets

The report published by the People’s Court argued that digital assets, including cryptocurrencies, have retained their legal attributes under the current legal framework. It highlighted the economic value of these assets and their classification as property.

Moreover, the court suggested methods to address cryptocurrency-related crimes without infringing upon citizens’ private rights.

Specifically, the court proposed that cryptocurrency should be treated separately under civil and criminal law.

It stressed that personal property and money associated with digital assets should be approached from a standpoint of legality, ensuring balanced protection of personal property rights and public interests.

Contrasting Government Policy

This stance taken by the Chinese court stands in sharp contrast to the government’s ban on private cryptocurrencies, which encompassed a crackdown on web3 firms and influencers operating in mainland China. 

Despite the government’s tight measures, Chinese courts have made a series of pronouncements affirming the legal backing of digital assets as personal property.

Earlier this year, a district court in Shanghai ruled in favor of Bitcoin ownership rights, showing a Bitcoin owner’s right to compensation over an unpaid loan. The court’s decision was grounded in Bitcoin’s value and its classification as personal property.

Shifting Stance on Digital Assets

The Chinese government’s stance on digital assets has been a subject of contention, particularly following its comprehensive ban on private cryptocurrencies and related transactions in 2021. 

📈 Following last week’s updated ban on crypto-related activities in #China, the tokens of some exchanges with ties to the country now appear to be trying to recover their heavy losses. https://t.co/Pvcmvca8si

— Cryptonews.com (@cryptonews) September 28, 2021

The People’s Bank of China cited market risks and the need to protect investors from scams as reasons for the ban, asserting that virtual currency-related activities constituted illegal financial activities that posed a threat to people’s assets.

This sweeping ban had a significant impact on the cryptocurrency industry, leading to the enforcement of total mining restrictions in China. Energy concerns, coupled with climate quotas, prompted cities to take stringent measures against cryptocurrency mining.

However, in a surprising turn of events, reports indicate a shifting stance in China’s approach to digital assets. China’s Bitcoin miners have regained their position as the second-largest globally over the last two years, and there has been notable progress in digital asset initiatives in Hong Kong, often seen as a testing ground for mainland China.

Additionally, China is actively developing a Central Bank Digital Currency (CBDC), expanding its use cases for the digital yuan in various sectors, including banks and transportation, while also promoting cross-border transactions.

China may be reconsidering its stance on digital assets, opening up new. Whether this signals a change in the government’s approach remains to be seen, but it shows the growth of the digital asset matters in China.

NB: Any Information provided here is NOT FINANCIAL ADVICE. Do Your Own Research before making any Financial Decisions.