Despite the comprehensive ban on cryptocurrencies imposed by Beijing in 2021, several Chinese courts in recent years have delivered landmark rulings by recognizing virtual asset ownership rights.
Recently, the People’s Court of China released a report on the legality of virtual assets and analyzed the criminal law attributes of these digital assets, titled “Identification of the Attributes of Virtual Currency Assets and Handling of Cases Involving Related Assets.”
In the report, the Court acknowledges that virtual assets possess economic attributes and can be classified as property. Therefore, virtual assets held by individuals within the framework of existing legal policies are considered legal property and are protected by the law.
Additionally, the report provides proposals for dealing with crimes related to virtual assets. It emphasizes that funds and assets related to cases cannot be seized and must be based on the reconciliation between criminal and civil laws. Such cases require separate handling to achieve a balanced protection between personal ownership rights and societal and public interests.
It’s worth noting that China had enforced a comprehensive ban on all activities related to cryptocurrencies and prohibited overseas exchanges from providing services to mainland customers.
However, despite the hostile national stance towards digital assets, the government seems to have softened its position. Many Chinese courts have taken contrasting views on Bitcoin and other digital assets in recent years.
For instance, in September 2022, a lawyer proposed that holders of cryptocurrencies in China should be legally protected in cases of theft, misappropriation, or breach of lending agreements, despite the cryptocurrency ban. In late May 2022, a Shanghai court affirmed that Bitcoin qualifies as virtual property and therefore must adhere to property rights.
Furthermore, China’s increasing market share in Bitcoin mining surged to the second position within a year. Notably, the Supreme People’s Court of China even recognized debt obligations through cryptocurrency.
It is known that the People’s Republic of China’s courts exercise judicial power independently and are not subject to administrative or governmental interference. These courts handle criminal, civil, and administrative cases, as well as economic disputes.
In conclusion, despite China’s strict cryptocurrency ban, Chinese courts have displayed a nuanced and evolving perspective on virtual assets, recognizing their economic attributes and property status in various rulings. This signals a potential shift in the country’s approach to digital assets and their legal recognition.