Individuals and businesses can now own and transfer bitcoin legally without fear of repercussions. The Shenzhen Court of International Arbitration ruled that bitcoin and other cryptocurrencies are valuable legal property and as such are protected under Chinese law.
Holding and purchasing crypto safe in China
The case concerned around USD 500,000 worth of cryptocurrencies – 20 Bitcoin, 70 Bitcoin Cash, and just over 12.5 Bitcoin Diamond. The defendant sought to argue that the transfer of cryptocurrencies was at the time illegal (with China’s notorious ICO and crypto ban), so the unnamed defendant could not return the coins to the rightful owner. The court concluded that the regulations did not apply to the private contract between the two parties and the case sets a landmark precedent. This is the first case of its kind in China to confirm cryptocurrencies as legal property. As per cryptocurrency researcher, Katherine Wu –
“The Party contends that Bitcoin has characteristics of a property (SOV), can be controlled by the owner, and has economic value to the owner. It does not break any laws. This arbitrator agrees. In the arbitrator’s view, whether or not bitcoin is legal, the circulation and the payment of bitcoin is not illegal. Bitcoin does not have the same rights as fiat, but that does not mean that holding or paying with crypto is illegal.”
In the majority of other jurisdictions, holding or paying with cryptocurrencies is also not illegal. However, gains made on cryptocurrencies are still to be reported to relevant authorities for taxation. Generally, cryptocurrencies are not illegal to own, and in some instances, cryptocurrency owners are being given increased rights. A British Colombian court recently ruled that cryptocurrency sent to the wrong address has to be returned, in a similar fashion to how money sent to the wrong bank account has to be returned.
The significance of crypto as legal property
While it might appear to be a positive advance for cryptocurrency in China, the region is in no way progressive in its management of DLT. The rulings come not long after Chinese authorities announced a plan to connect identities on the blockchain. Blockchain service providers will be required by law to attain the ID number and the name of everybody transacting on the blockchain, which would completely defeat the point of the whole endeavor.
While cryptocurrency acceptance and adoption is growing in China, much like everywhere else in the globe, it is still very much a surveillance state. It is further along in technological advances, such as the development of smart cities, but in terms of civil liberties is still very much behind. While citizens are free to trade cryptocurrencies as legal property freely as per this court ruling, the privacy of the transactions will most likely be heavily restricted.
Digital Nomad with an interest in Zen and Blockchain technology.
Law graduate with 3 years experience as a consultant in the capital markets industry and 4 years experience freelancing on UpWork as a Creative Writer.