In a recent report, a People’s Court in China declared that digital assets are legal financial properties that are protected by the laws of the countries. However, the court’s assertion on crypto assets seems odd as Beijing’s ban on cryptocurrencies in 2021 is still active.
Over the years, many Chinese courts have expressed their opinion on the legality of digital assets, claiming that the country’s property rights protect people who hold these financial assets. In alignment, a People’s Court published its decrees on the lawfulness of digital assets in China, analyzing their criminal law features. In addition, it said the financial tools are still legit and protected by law going by the current legal policy system.
In China, the People’s Court holds judicial power alone, making it resistant to influences from any administration or public alliance. It tries civil, administrative, and criminal lawsuits, including economic issues. In its recently published report, it recognized digital assets as attributes of the economy, worthy of being categorized as property.
Even though the broader administration of China had declared all foreign digital assets criminal in 2021 when it imposed a ban on it, the court argues in its report that digital assets possessed by investors should be deemed legit and secured by the policy framework laws.
Courts Deemed Cryptos As Legal Properties, Defying Active Ban
In addition, the People’s Court also mentioned some suggestions on how to solve fraudulent activities that involve crypto assets, pointing out that since the authorities cannot cease the funds stolen in a digital asset-based crime, unified criminal and civil laws should be used to deal with such cases. It added that those crime cases should be solved separately to balance social & public interest and personal property rights obligations.
China’s blanket ban on cryptocurrencies prevents local entities from engaging in crypto-based operations. Also, it forbids offshore crypto entities from offering crypto products or services to any area under the country’s jurisdiction. But, despite the stringent and harsh national policy on crypto, many Courts in China see the case differently, proposing contrasting views on virtual assets.
According to the report, the first contradictory stance on crypto assets from the Judiciary in China surfaced in September 2021 when an attorney argued that crypto assets holders in the country have the law’s protection in cases where their funds are stolen, misappropriated, or a loan contract breach occurs, even though the government bans cryptocurrencies.
Similarly, in May 2022, a People’s Court in China asserted that Bitcoin can legally be classified as digital property, subjecting to the rules surrounding property rights in the country. Nonetheless, the Chinese government seems to have softened its crypto clamp down recently, evident in the recent rapid growth in Bitcoin mining activities in the region.
According to reports, the mining rate initially dropped to zero when the ban was imposed, but shortly after, it skyrocketed again. This shows that the hostility level of the Chinese administration towards the digital assets ecosystem is gradually diminishing; however, it is still very much in action, according to the report.
China’s Crypto Ban Stands Despite Recent National Institution Reforms
Meanwhile, in its struggles to create a better regulatory framework to tame and regulate the rapidly developing cryptocurrency industry, the Chinese government announced back in March that it would be replacing its existing banking and insurance agencies with a new agency that fits and is capable of overseeing the evolution of the new emerging technologies like cryptocurrency and blockchain.
According to the report, the China Banking and Insurance Regulatory Commission, the China Securities and Regulatory Commission, and the People’s Bank of China are the primary bodies controlling the country’s financial sector. However, Chinese authorities said it would soon abolish the China Banking and Insurance Regulatory Commission agency.
Furthermore, the responsibilities of this agency, together with the roles of the central bank and the China SEC, would be bestowed on the new agent that would be formed. The Congress voted on the suggestion on March 10, according to the report. More so, if developed and commissioned, reports showed that the proposed agency would give more potency to institutional supervision in terms of behaviors and functions.
In addition, the announcement surfaced shortly after China’s President Xi Jinping called for the reformation of the country’s state and party institutions. Although there would be many new developments in the financial sector of the country, according to the announcement, however, the country eluded any reformation or review on the blanket ban on crypto in the country.