According to a recent ruling, the Shanghai High Court stated that Cryptocurrency assets have "property attributes," and Chinese law does not completely prohibit them. However, these protections only exist when Cryptocurrency is viewed as commodities, not as currency or business instruments.
These comments arose in a scam involving two businesses and a failed Token issuance, and the Court has strongly condemned their actions.
Strict policy on Cryptocurrency of China
According to a recent post on WeChat, this ruling appeared alongside a dispute between an unidentified agricultural development company and an investment management company, along with an agreement for virtual currency issuance.
"Raising 'virtual currencies' such as Bitcoin and Ethereum from investors through illegal Token issuance and circulation... is essentially an act of unauthorized public funding. Therefore, no organization or individual can participate in the issuance and funding of illegal Tokens," according to the Court's ruling.
However, this is not the only ruling of the Court in this case. Although the Court has a very strict view on the main dispute between these two companies, the ruling emphasizes that these are not the only applications of Cryptocurrency.
The Court confirms that Cryptocurrency serves as valuable commodities, and there are no prohibitions on this use.
Is China changing its stance?
Since the Bitcoin mining ban in 2021, the international community has been very interested in bringing Cryptocurrency back to this huge economy. Earlier this year, Hong Kong approved the first Bitcoin ETF fund, opening up opportunities for domestic investors to access Bitcoin.
Furthermore, China has supported Cryptocurrency and blockchain technology for cross-border payment solutions at the BRICS Summit. Russia has also expressed more optimism about Cryptocurrency than China, but it has used Cryptocurrency for trade with Russia.
This country also has a digital currency CBDC, the digital yuan, which is currently being actively used for other international transactions.
Additionally, the elected U.S. President Donald Trump has officially proposed using Bitcoin to cope with China's economic influence. Justin Sun, a Chinese citizen and the founder of Tron, has recommended that China embrace this technology. Sun has expressed that China's strict restrictions on the industry could lead other countries to gain a decisive technological advantage.
Nonetheless, there are very few signs indicating a broad change in China's stance on Cryptocurrency. While the High Court acknowledges that Cryptocurrency may have some legal applications, they have dealt severely with this case.
It is alleged that the investment manager in this case deceived his partner to fund a Token project. The Chinese court considers this an inherent risk when working with Cryptocurrency.
The Court emphasizes that the use of Cryptocurrency for important business transactions, especially for the issuance of new Tokens, is still completely prohibited. In fact, the Court even stated that Bitcoin can disrupt the financial system and act as a tool for illegal activities. This reflects China's firm anti-Cryptocurrency stance in its official policy.
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