According to a recent ruling, the Shanghai High Court declared that Cryptocurrency assets have “property properties,” and Chinese law does not ban them outright. However, these protections only exist when Cryptocurrencies are viewed as commodities, not as currencies or trading tools.
These opinions emerged in a fraud case involving two businesses and a failed Token issuance, and the Court strongly condemned their actions.
China’s strict policy on Cryptocurrency
According to one post new on WeChat, the ruling appeared alongside a dispute between an unidentified agricultural development company and an investment management company, and an agreement to issue virtual currency.
“The raising of ‘virtual currencies’ such as Bitcoin and Ethereum from investors through the issuance and circulation of unauthorized Tokens… is essentially an act of illegal public financing. Therefore, no organization or individual can participate in the issuance and financing of unauthorized Tokens,” according to decision of the Court.
However, this is not the Court’s only ruling on the case. Although the Court took a very strict view of the main dispute between these two companies, the ruling emphasized that these are not the only applications of Cryptocurrencies.
The Court confirmed that Cryptocurrency serves as a valuable commodity, and there is no prohibition on its use.
Is China changing its perspective?
Since the 2021 Bitcoin mining ban, the international community has been very interested in bringing Cryptocurrency back into this giant economy. Earlier this year, Hong Kong approved the first Bitcoin ETF, opening up opportunities to access Bitcoin for domestic investors.
Additionally, China supported Cryptocurrency and blockchain technology for cross-border payment solutions at the BRICS Summit. Russia also expressed more optimism about Cryptocurrency than China, but the country has used Cryptocurrency for trade with Russia.
The country also has a CBDC digital currency, the digital yuan, which is currently being actively used for other international transactions.
In addition, US President-elect Donald Trump has officially proposed using Bitcoin to counter China’s economic influence. Justin Sun, Chinese citizen and founder of Tron, recommended that China embrace this technology. Sun has expressed that China’s strict restrictions on the industry could lead to other countries gaining a decisive technological advantage.
Even so, there are few signs of a widespread change in China’s stance on Cryptocurrencies. While the High Court acknowledged that Cryptocurrencies may have some legitimate applications, they came down hard on this case.
Supposedly, the investment manager in this case defrauded his partner to fund a Token project. Chinese courts consider it an inherent risk when working with Cryptocurrencies.
The Court emphasized that the use of Cryptocurrencies for significant corporate transactions, especially for the issuance of new Tokens, remains completely prohibited. The Court even stated that Bitcoin could disrupt the financial system and serve as a tool for illegal activities. This reflects China’s firm anti-Cryptocurrency stance in its official policy.