A Chinese court has reportedly ruled that virtual currency should not be immediately treated as illegal under the nation’s legal framework, in apparent contravention to prevailing CCP policy.
Beijing-based Web3 news outlet Odaily reported Sept. 1 that the People’s Court of China had ruled that virtual currency should not be classified as illegal within the current policy framework.
Citing court documents, Odaily reported that the court held that virtual currencies should be considered property under the current law. It suggested that cases dealing with criminal proceeds of virtual currencies be handled on a case-by-case basis to balance individual property rights and public interests.
At press time, the primary court documents were not publicly accessible.
This shift in legal perspective is intriguing, given China’s historical opposition to cryptocurrencies. China has a long history of antagonism towards the crypto industry. In 2013, the Chinese government prohibited banks from handling Bitcoin transactions; in 2017, it banned initial coin offerings (ICOs); it cracked down on Bitcoin mining operations in 2019 and eventually imposed outright bans on crypto trading and mining in 2021. These are but a few of the many other measures the CCP has taken to curb crypto adoption within the country.
Precedent
This is not the first time a Chinese court has challenged government policy on crypto. A 2018 case in Hangzhou also upheld the legal status of Bitcoin as “virtual property,” marking the first time a Chinese court has appeared to contradict existing policy. In that case, despite the illegal status of trading and mining of Bitcoin, the court ruled that Bitcoin had the attributes of property: value, scarcity, and responsibility. It is unclear if this ruling was consulted as precedent for today’s ruling.
China’s history with blockchain and cryptocurrency is a complex narrative marked by an ongoing tension between innovation and centralized control. On one hand, China has shown significant interest in harnessing the potential of blockchain technology. It has published national blockchain standards to guide industry development, launched a national blockchain research center, and taken significant strides toward implementing the digital yuan, the world’s first true Central Bank Digital Currency (CBDC). These efforts have all been centralized, with the state playing the most crucial role in guiding and controlling blockchain technology use cases.
The CCP’s enthusiasm for blockchain technology does not extend to decentralized cryptocurrencies. More than twenty cryptocurrency firms left China due to a severe ban on crypto, underscoring the government’s desire to maintain strict control over the country’s financial system. The Chinese government has exhibited a clear preference for technologies it can regulate and control, such as its digital yuan, which is centrally issued and controlled by the People’s Bank of China.
Furthermore, the country’s stance toward generative AI regulations is demonstrating a similarly authoritarian approach, mandating that AI developments must adhere to the “core values of socialism.” While the country continues to foster innovation, it does so within a tightly controlled framework that aligns with its socio-political objectives.
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