Chinese People's Courts Asserts Legal Status of Virtual Assets

A People's Court in China has issued a report examining the legal status of virtual assets and analyzing their attributes within criminal law. According to the court's findings, virtual assets remain legal property and are protected by the existing legal framework.

The People’s Courts of the People’s Republic of China operate independently in exercising judicial authority and are not influenced by administrative or public organizations. These courts handle a wide range of cases, including criminal, civil, administrative, and economic disputes.

The report, titled "Identification of Virtual Currency Property Attributes and Management of Related Assets," acknowledges that virtual assets possess economic characteristics and can be classified as property. Despite China's comprehensive ban on foreign digital assets, the report argues that individually-held virtual assets should be considered legal and protected under the current policy framework.

Furthermore, the report provides recommendations for addressing virtual asset-related crimes. It suggests that cases involving money and property should be handled through a harmonization of criminal and civil law, ensuring a balanced protection of personal property rights and societal interests.

China has implemented a ban on all cryptocurrency-related activities and foreign crypto exchanges serving mainland customers. However, the stance of Chinese courts on Bitcoin and other digital assets has differed from the national policy. Notably, in September 2022, a lawyer argued that Chinese crypto holders are protected by the law in cases of theft, misappropriation, or breaches of loan agreements, despite the crypto ban. Additionally, in May 2022, a Shanghai people's court affirmed that Bitcoin qualifies as virtual property, subject to property rights.

China's historically hostile approach to Bitcoin and cryptocurrencies appears to be evolving in recent years. This transformation is evident in the resurgence of China's Bitcoin mining industry, which bounced back to become the second-largest in the world within a year after the blanket ban.