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In 2021, Beijing made headlines by imposing a comprehensive ban on cryptocurrencies. However, in a surprising twist, various Chinese courts have consistently upheld the rights of virtual asset holders over the years.
The People’s Court Report on Virtual Assets
Recently, a People’s Court in China released a detailed report discussing the legal status of virtual assets and their classification under criminal law. The report, titled “Identification of the Property Attributes of Virtual Currency and Disposal of Property Involved in the Case,” emphasized that despite the overarching ban, virtual assets remain legal properties under the prevailing legal framework and are thus safeguarded by law.
It's worth noting that the People’s Courts in China operate with judicial autonomy and are impervious to interference from administrative or public entities. Their jurisdiction spans criminal, civil, administrative, and economic disputes.
Virtual Assets: Economic Attributes and Legal Protection
The court's report acknowledged the inherent economic attributes of virtual assets, leading to their classification as property. While China has declared all foreign digital assets illegal, the report contends that individual-held virtual assets should be recognized as legal and shielded by law within the existing policy framework.
Furthermore, the report provides recommendations on addressing crimes associated with virtual assets. It suggests that monetary and property-related issues in such cases should not be subject to confiscation. Instead, a harmonized approach between criminal and civil law should be adopted, ensuring a balanced protection of individual property rights and broader societal and public interests.
Contrasting Views: National Policy vs. Judicial Decisions
China's blanket prohibition encompassed all crypto-related activities, including barring foreign crypto exchanges from catering to mainland clientele. Yet, the nation's courts have consistently presented a differing viewpoint on Bitcoin and other digital assets.
A notable instance of this divergence emerged in September 2022. A legal expert proposed that despite the crypto ban, Chinese crypto holders are legally protected in scenarios like theft, misappropriation, or loan agreement breaches. Reinforcing this perspective, a Shanghai court in May 2022 affirmed Bitcoin's status as virtual property, thereby granting it property rights.
China's Fluctuating Relationship with Cryptocurrencies
China's adversarial approach towards Bitcoin and other cryptocurrencies is well-documented. However, recent years have witnessed a subtle shift in the government's attitude. This change was evident in the resurgence of China's Bitcoin mining share. Following the blanket ban, China's contribution plummeted to zero but astonishingly rebounded to secure the second position within a year.
