Despite the comprehensive ban on cryptocurrencies imposed by Beijing in 2021, various Chinese courts have consistently recognized that virtual asset holders possess property rights.
A recent report from a People’s Court in China delved into the legality of virtual assets, scrutinizing their attributes under criminal law. The report affirmed that virtual assets, within the existing legal policy framework, retain their status as legal property and enjoy protection under the law.
It’s important to note that the People’s Courts in the People’s Republic of China operate independently with no interference from administrative or public organizations. These courts handle a wide range of cases, including criminal, civil, administrative, and economic disputes.
The report, titled “Identification of the Property Attributes of Virtual Currency and Disposal of Property Involved in the Case,” acknowledged the economic attributes of virtual assets, categorizing them as property. Despite China’s comprehensive ban on foreign digital assets, the report argues that virtual assets held by individuals should be considered legal and entitled to protection under the existing policy framework.
Furthermore, the report provided recommendations for dealing with crimes involving virtual assets. It emphasized that cases involving money and property should not be subject to confiscation but rather governed by a harmonization of criminal and civil law. This approach seeks to strike a balance between safeguarding personal property rights and upholding societal and public interests.
China’s stance on cryptocurrencies has indeed been adversarial, marked by a blanket ban on crypto-related activities and the prohibition of foreign crypto exchanges from serving mainland customers. Nevertheless, Chinese courts have consistently taken a different position on Bitcoin and other digital assets.
The divergence in views became evident in September 2022 when a legal expert suggested that crypto holders in China are legally protected in cases of theft, misappropriation, or breach of loan agreements, despite the crypto ban. In May 2022, a Shanghai court reaffirmed that Bitcoin qualifies as virtual property and, consequently, falls under property rights.
While China’s government has historically maintained a hostile stance toward Bitcoin and cryptocurrencies, there have been signs of a more lenient approach in recent years. Notably, China’s share of Bitcoin mining, which had plummeted to zero following the blanket ban, reclaimed the second position within a year, indicating a shift in policy dynamics.