Key Takeaways
- The report solidifies the status of virtual assets as legal property deserving protection under Chinese law
- The report argues that crypto crimes should be based on the unification of criminal and civil law.
In a significant development, a People’s Court in China has issued a comprehensive report that dives deep into the legal aspects of virtual assets, reshaping the nation’s stance on cryptocurrencies. This development comes amidst China’s sweeping ban on foreign digital assets, bringing newfound clarity for cryptocurrency investors within the country.
Titled “Identification of the Property Attributes of Virtual Currency and Disposal of Property Involved in the Case,” the report solidifies the status of virtual assets, including cryptocurrencies, as legal property deserving protection under Chinese law. This marks a notable shift in a regulatory landscape that has long been shrouded in uncertainty and restrictions.
Crucially, the People’s Courts of the People’s Republic of China exercise their judicial authority independently, free from interference by administrative or public entities. This autonomy has empowered the courts to chart their course in the realm of virtual assets.
The report underscores the fact that virtual assets are now firmly established as legal property within the existing policy framework. Despite the broad ban on foreign digital assets, virtual assets held by individuals in China are now officially recognized as legal entities entitled to the protection of the law. This newfound recognition offers a substantial boost in legal security and safeguards for cryptocurrency investors and their digital holdings.
A critical issue addressed in the report concerns the disposition of property in cases linked to virtual assets. Given the unique nature of cryptocurrencies, where conventional confiscation methods do not apply, the report advocates an approach that harmonizes criminal and civil law. This approach aims to strike a balance between safeguarding personal property rights and protecting broader social and public interests.
This shift in perspective is part of a broader trend. Over the past year, Chinese courts have been taking increasingly progressive steps in acknowledging the value and legal attributes of cryptocurrencies.
In September 2022, a lawyer argued that despite the blanket ban on cryptocurrency activities, crypto holders in China should be protected by the law in cases involving theft, misappropriation, or loan agreement breaches. In May 2022, a Shanghai court went further, officially recognizing Bitcoin as virtual property, thus subject to property rights.
The regulatory landscape in China is a dynamic one as authorities grapple with the ever-evolving global cryptocurrency market. In May of this year, the country’s Supreme Court issued guidelines regarding cryptocurrency-related disputes, making it clear that settling debts using a small amount of digital assets would be considered legal as long as both parties agreed. However, the court emphasized that this approach should only be pursued when no valid reasons exist against it.
