The Shanghai High People’s Court gave a new twist to China’s crypto landscape when it ruled that Bitcoin has a certain economic value. It highlighted that the virtual asset is protected by the country’s laws. The Court posted on WeChat, a messaging platform, that Bitcoin harbors the relevant property attributes.
The People’s Bank of China (PBOC) banned all cryptocurrency transactions in September 2021. It cited cryptocurrencies facilitating crime and potentially threatening China’s financial system. Moreover, Chinese experts highlighted that Bitcoin’s decentralized nature, together with other blockchain-based cryptocurrencies can be used to circumvent capital controls more easily than a fiat currency that uses the banking system. The PBOC prioritized threat of capital flight with the Chinese economy struggling to recover from the ongoing COVID-19 pandemic. Li Daokui, a former advisor for PBOC, pointed out that the relatively fast economic recovery of the United States could fuel greater capital flight. He believes Chinese residents could be inclined to purchase assets in the US for greater financial security.
Now, the People’s Court has formed a unified opinion on the legal position of Bitcoin. It has identified it as a virtual property with the rule of law of property rights covering it for protection. The High People’s Court ranks as the highest local court within provinces, but it’s unclear whether other higher courts will take a similar stand on Bitcoin.
Liu Yang, a Beijing-based lawyer, says the court’s ruling would act as a significant point of reference for Bitcoin-related civil disputes within the Shanghai area. Declaring Bitcoin would get legal protection, as per the court ruling. But it’s yet to see how the government will react to the directive.