A recent report from a People’s Court in China has shed light on the legality of virtual assets in the country. The court analyzed the criminal law attributes of these digital assets and concluded that, under the current legal policy framework, virtual assets are considered legal property and are protected by law.
The People’s Courts of the People’s Republic of China are known for exercising judicial power independently, and they are not subject to interference by administrative or public organizations. These courts are responsible for trying criminal, civil, administrative, and economic dispute cases.
In the report titled “Identification of the Property Attributes of Virtual Currency and Disposal of Property Involved in the Case,” the People’s Court acknowledged that virtual assets possess economic attributes and therefore should be classified as property. This finding goes against the country’s blanket ban on foreign digital assets, as the report argues that virtual assets held by individuals should be deemed legal and protected by law within the existing policy framework.
The report also made suggestions on how to handle crimes involving virtual assets. It proposed that, since the money and property involved in such cases cannot be confiscated, a balanced protection of personal property rights and social and public interests should be achieved through the unification of criminal and civil law. This would ensure that cases involving virtual assets are treated separately and fairly.
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China’s stance on digital assets has been largely prohibitive, with a blanket ban on all crypto-related activities and a prohibition on foreign crypto exchanges offering their services to mainland customers. However, the country’s courts have taken a more nuanced approach to Bitcoin and other digital assets over the years.
The first instance of this differing stance arose in September 2022 when a lawyer suggested that crypto holders in China are protected by the law in the event of theft, misappropriation, or breach of a loan agreement, despite the ban on crypto. Later in May 2022, a Shanghai court affirmed that Bitcoin qualifies as virtual property and is subject to property rights.
While China’s government has maintained a hostile stance towards Bitcoin and cryptocurrencies, there have been signs of a softening in recent years. This is evident from the rise in China’s Bitcoin mining share, which dropped to zero following the blanket ban but quickly rebounded to claim the second spot within a year.
The report from the People’s Court adds to the growing body of evidence suggesting that China’s views on virtual assets are becoming more nuanced. Despite the overarching ban on foreign digital assets, the court has acknowledged the property attributes of virtual assets and emphasized the need to protect individual property rights while also considering social and public interests.
This evolving perspective could potentially have significant implications for the future of virtual assets in China. As the country continues to explore its regulatory approach to digital assets, it will be interesting to see how these findings from the People’s Court influence the broader legal landscape and perhaps pave the way for more inclusive policies and regulations.
Overall, while China’s blanket ban on foreign digital assets remains in place, this report highlights a more nuanced understanding of virtual assets within the country’s legal system. It recognizes their economic attributes and emphasizes the importance of protecting individual property rights. As the landscape of digital assets continues to evolve globally, these findings could have far-reaching implications for the regulatory framework surrounding virtual assets in China.
