Chinese High Court declares “cryptocurrency is not protected by law”
China’s Northern Shandong province high court has ruled against cryptocurrency in a recent verdict. The virtual token dispute involved an investment of $10,756 by the plaintiff. The litigant filed the case on his virtual token purchase in 2017. However, the ongoing Chinese crypto crackdown resulted in the plaintiff’s account closure by the People’s Bank of China in 2018. This came after the central bank, restated the ban on payment institutions supporting cryptocurrency transactions.
Shandong High Court favored Jinan intermediate court’s verdict in January this year. Jinan city court marked the plaintiff’s fraud allegation as unjustified, as digital assets lack legal status in the nation. This verdict was furthered by Shandong’s High Court on Sunday, clarifying that “investing or trading cryptocurrency isn’t protected by law”.
Chinese District Court argues BTC as Digital property
This verdict contradicted China’s District Court’s recent article on the protection of virtual property that is visible and intangible. Shanghai Minhang Court argued in a recently published article the status of Bitcoin as digital property. It elaborated that BTC is a virtual asset that is disposable, exchangeable, and exclusive.
Court highlights BTC’s high exchange value
Shanghai Minhang District Court argued Bitcoin’s high exchange valuation as a reason for its status as virtual property. This means that all resources, including property, and energy that are exchanged for BTC, are held as a higher exchange value, which further indicates its undeniable status as virtual property. Furthermore, the Shanghai Minhang Court emphasized that BTC is a virtual product as it is acquired through legal labor. Additionally, it is disposable, exchangeable, and exclusive. The court said that by gaining the status of a virtual commodity, BTC also attains the status of the virtual property.
However, Shanghai Minhang District Court also highlighted BTC’s lack of regulatory ground. While Bitcoin holds strong exchange valuation status, it falls short of monetary properties, resulting in an unsatisfactory status to be used as a currency in the country. The article mentioned the absence of legal compensation and compulsion as the reason for BTC’s unregistered status as a currency in the market.
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