China Court Classifies Digital Assets As Property Despite Blanket Ban By Government
A People’s Court in China has stated that under the existing legal framework, digital assets have economic value and are still legal property backed by law.
In a recently published report cited by local media analyzing the legality of cryptocurrencies, the court highlighting the criminal law attributes of virtual assets concluded that the assets maintain their attributes as legal property.
Per the report, the court suggested several ways to deal with cryptocurrencies linked with crimes without affecting the private rights of citizens.
It noted that while crypto might not be confiscated based on its nurture, it should be kept separately under civil and criminal law. The report concludes that personal property and money should be treated from a “standpoint of legality.”
This comes after the Chinese government declared a blanket ban on all private cryptocurrencies in 2021 enforcing a major clampdown on web3 firms and influencers in mainland China.
Despite the ban, Chinese courts have made several pronouncements in sharp contrast with the decision establishing that digital assets have legal backing as personal property.
This year, a district court in Shanghai ruled on Bitcoin’s ownership right after it ruled in favor of a Bitcoin owner’s right to compensation over an unpaid loan.
The ratio of the court was based on Bitcoin’s value and scarcity it falls under the spectrum of personal property.
Is a change of stance imminent?
The Chinese government has been at loggerheads with digital assets leading to a blanket ban on all private cryptocurrencies in the country.
In 2021, the government announced a ban on all crypto transactions including exchanges, influencers, and other related groups.
The People’s Bank of China cited market risks for its citizens stating that the move will protect investors from prevalent scams and the country’s economy.
“Virtual currency-related business activities are illegal financial activities…it seriously endangers the safety of people’s assets.”
The Chinese ban hit the industry the most following the enforcement of total mining restrictions in the country as cities cited energy concerns after falling short of their climate quota.
Over the last two years, reports have described China’s stance as shifting as its Bitcoin’s miners share is back to second globally.
The recent digital asset revolution in Hong Kong leading to new firms offering trading services and the development of blockchain projects in the jurisdictions has been tipped as a “test net” for mainland China.
Recall that reports made rounds in China’s plan to transplant its social credit ID system to the metaverse as it pushes its views with the International Telecommunications Union (ITU) against the United States and Europe.
China also leads in the development of a Central Bank Digital Currency (CBDC) as the country continues to expand its use cases for the digital yuan incorporating several parts of the economy including banks and transportation while pushing cross-border transactions.