The Shanghai Songjiang District People's Court issued a landmark ruling on November 18, confirming that cryptocurrencies have property characteristics under Chinese law. However, the ruling still maintains strict restrictions on cryptocurrency-related business activities.
Ruling on Cryptocurrency Ownership
According to Judge Sun Jie, in a dispute involving initial coin offerings (ICOs), which are illegal in China, the law does not prohibit individuals from owning cryptocurrencies. However, cryptocurrencies are considered virtual goods, do not have the legal value equivalent to official currencies, and cannot be used as a legal means of payment or investment.
Sun Jie explained that regulations from the People’s Bank of China and other regulatory bodies require strict control over cryptocurrency-related businesses. Businesses are prohibited from trading, investing, or issuing tokens. However, individual ownership of cryptocurrencies is still recognized within the current legal framework.
Crypto Community Reacts
The ruling was received positively by the international cryptocurrency community, with many seeing it as a sign that China’s hardline stance on cryptocurrencies may be easing. Recent events, such as Nano Labs, a Chinese cryptocurrency mining chip company, starting to accept Bitcoin payments, have also fueled expectations that China may be adjusting its crypto policy.
However, Eliézer Ndinga, Vice President of 21Shares, stressed that China’s regulatory stance remains very strict. He compared the situation to the 1933 ban on gold ownership in the United States, but said that China does not apply similar measures. While private ownership is recognized, cryptocurrency-related business activities are still completely prohibited.
The Future of Cryptocurrency in China
While China still views cryptocurrencies as a threat to financial stability, the move to recognize their asset value could open the door to future policy adjustments. This comes amid a booming cryptocurrency market, with Bitcoin breaking $99,299 on the morning of November 22. Small changes like these could be the first step in a larger shift in China’s approach to the cryptocurrency industry.