Owning digital assets is not illegal for individuals under Chinese law, a Shanghai judge has ruled. However, enterprises are prohibited from investing in digital assets or issuing tokens “at will,” the judge added.
Sun Jie, a judge at Shanghai’s Songjiang People’s Court, shared her opinion on the court’s official WeChat account, noting that it was not “illegal for individuals to hold cryptocurrency.” However, businesses can’t invest in digital assets or issue tokens “at will,” the judge added.
Jie further stated that Chinese law considers digital assets to be virtual commodities to which property attributes are assigned. However, the law bars businesses from engaging in digital asset investment as it can disrupt the country’s economy or provide an avenue for financial crime.
“Virtual currency trading speculation activities such as BTC will not only disrupt the economic and financial order but also may become a payment and settlement tool for illegal and criminal activities, breeding money laundering, illegal fund-raising, fraud, pyramid schemes and other illegal and criminal activities,” Judge Sie stated.
“That is why laws and regulations always maintain a high-pressure crackdown on speculative activities in cryptocurrency trading.”
While it may not be illegal to hold digital assets, the judge warned the public against ‘crypto,’ reminding investors that the law may not be able to protect them in certain instances if they lose their money.
The ruling was in a case involving two companies that were fighting over a breach of contract in a token issuance agreement. Since the law considers token issuance illegal, the judge ruled that all payments made between the two parties must be refunded.
It’s the latest twist in China’s complicated relationship with digital assets. On the surface, the Chinese government has banned digital assets since 2017, when it purged local exchanges and outlawed initial coin offerings (ICOs), which were wildly popular globally at the time. It followed this up with a ban on block reward mining, pushing miners to either relocate or shut down.
However, data from Crypto Quant in September revealed that Chinese mining pools controlled 55% of the BTC mining hashrate, ranking ahead of the second-placed United States at 40%.
Chinese courts have also made over a dozen rulings that implied that owning digital assets wasn’t illegal. In one such ruling, a court in the southeastern city of Xiamen ruled that Chinese law protects digital asset owners, which it regards as property.
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