Emily Walker
A Shanghai court has clarified that owning Bitcoin and other digital assets is legal in China, which is a significant move towards defining regulations for cryptocurrency holders in the country.
Legality of Personal Bitcoin Ownership
The statement, released by judge Sun Jie of the Shanghai Songjiang People’s Court via the Shanghai High People’s Court WeChat account, confirmed that while individual ownership of cryptocurrencies is allowed, businesses are still barred from investing in cryptocurrencies or issuing tokens without the necessary regulatory clearances.
This legal opinion was made during the court’s examination of a case involving two firms disputing an initial coin offering (ICO), an action deemed illegal financing in China.
Historically, the Chinese government has viewed cryptocurrency as a potential risk to financial stability, leading to strict regulations. Since banning ICOs and crypto exchanges in 2017 and intensifying action against Bitcoin mining in 2021, the government has made crypto-related business activities illegal.
Nonetheless, Sun categorized cryptocurrencies as virtual commodities with ownership rights, indicating they are legal for personal possession.
Sun highlighted that the legal framework remains stringent against speculative trading in cryptocurrencies, reflecting the government’s cautious stance on the industry.
This aligns with Beijing’s strategy to safeguard the economic and financial environment from potential disruptions tied to cryptocurrencies, mainly due to fears of illicit activities.
Conflicts in Regulation
In a related event, Yao Qian, a former head at the People’s Bank of China’s digital currency research unit, was involved in a bribery scandal connected to cryptocurrency, underscoring the regulatory inconsistencies in the country.
While the recent ruling offers much-needed clarity, many industry insiders have known that personal cryptocurrency ownership has been largely permitted. Several courts have acknowledged cryptocurrencies as property protected by current legal standards.
However, there is no sign that Beijing plans to ease its tough regulations on the crypto sector, despite suggestions from experts advocating for a more liberalized market approach.
Zhu Guangyao, a former finance vice minister, noted in September the importance of cryptocurrencies to the digital economy and urged China to adapt to maintain global competitiveness, especially as the U.S. embraces the industry under the incoming administration of President-elect Donald Trump, who plans to utilize Bitcoin as part of the country’s strategic reserve.
Currently, Bitcoin has surged to an all-time high of $94,730, climbing by 2.5% in the last 24 hours, following a period of trading between $89,000 and $92,000 over the weekend.
Image courtesy of DALL-E, data sourced from TradingView.com.