There is technically no law in China stating that Bitcoin (or any cryptocurrency) is legal. There are, however, a growing number of court precedents establishing that fact (see the links at the end of this article). Precedents like these build on one another over time to establish legally accepted paradigms.
For instance, on July 18, 2019, a Chinese court described Bitcoin as “virtual property”. In the view of some, the “virtual” qualifier left open the crucial question about whether Bitcoin and other cryptocurrency can enjoy the protections afforded to objects and other forms of non-virtual property.
This week, on May 6, 2020, a ruling in the Shanghai №1 Intermediate People’s Court affirmed that Bitcoin can be considered property in China, in the full legal sense of the word. The ruling arose from a case in which 18.88 Bitcoin and over 6000 Skycoin had been stolen, and the thieves were arguing in court that since cryptocurrency is merely virtual property, it cannot enjoy the same legal protections as real-world property.
This civil court ruling upheld an earlier ruling from a Chinese criminal court, wherein the perpetrators were sentenced to prison and ordered to compensate the one who had been robbed. Their appeal in civil court was based on their assertion that “the current Chinese laws do not recognize the property attributes of Bitcoin and Skycoin, and do not regard Bitcoin and Skycoin as objects or property in the legal sense of China. Therefore, [the plaintiffs] do not have the right to request the return of [their] property rights.” It was this civil trial which came to a close this week, with a landmark ruling on the status of Bitcoin and other cryptocurrency in China as legitimate property.
The court considered the case to be a “dispute concerning compensation for foreign property damage,” characterizing Bitcoin as “foreign property”. However, since both parties in the suit live in China, the property law governing the case was Chinese. Despite its intangibility, the court recognized and reaffirmed in court that cryptocurrency like Skycoin and Bitcoin possess the most salient attributes of property, including value, scarcity, and controllability.
By stealing the Bitcoin and Skycoin, the thieves had violated the property rights of the aggrieved, who would otherwise enjoy the possession, use, profit, and spending opportunities inherent in owning a digital currency.
The lawsuit marks the end of a two-year saga of litigation and appeals. THe hearings were initiated by Synth, the Founder of Skycoin, whose personal funds were the stolen property in question. Synth was pleased that his lawsuit was able to affirm the legal status of Bitcoin and other cryptocurrency in such a critical global financial market as China.
The legal precedent established in this case and two other similar cases in Hangzhou and Shenzhen will firmly establish virtual currency as having essentially equal consideration under Chinese law as fiat currency, in terms of its property status.
The journey towards Bitcoin’s legal status arguably began in October of 2018 when a Chinese arbitration court ruled that “there is no law or regulation that explicitly prohibits parties from holding Bitcoin or [prohibits] private transactions in Bitcoin.” That the essence of this ruling now has the imprimatur of the Intermediate court solidifies cryptocurrency’s standing in Chinese law.
It will be exceptionally difficult for future cases of theft or fraud to take up the specious argument that virtual currency cannot legally be possessed by anyone, and that therefore the theft thereof is not illegal.
Synth, the founder of the Skycoin Project and successful plaintiff in the recent case, noted with some amusement that Bitcoin valuation rose 10% after word of the trial verdict was published in the media on May 6th.
More details about the recent ruling may be found on Baidu’s Chinese-language website. (Note that the pseudonym “Pete” is used when referring to Synth.)
Learn more about Skycoin’s actively developed new and upcoming projects at Skycoin.com.
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