Shanghai Court Clarifies Legality of Personal Cryptocurrency Ownership

A recent opinion from a Shanghai court has provided legal clarity regarding the personal ownership of cryptocurrencies in China. Sun Jie, a judge at the Shanghai Songjiang People’s Court, stated in an article published on the Shanghai High People’s Court’s official WeChat account that it is not illegal for individuals to hold cryptocurrency. This declaration offers much-needed certainty to crypto holders in China, particularly as Bitcoin reaches new record highs.

The comments came in the context of a case review involving a business dispute between two companies over an initial coin offering (ICO), which is considered illegal financing under Chinese law. While Sun Jie emphasized that individuals can legally own cryptocurrency, she also made it clear that commercial entities are prohibited from engaging in cryptocurrency investments or issuing tokens.

The judge further described virtual currencies as "virtual commodities with property attributes," distinguishing them from fiat currencies. While ownership by individuals is not illegal, she warned against the risks of engaging in cryptocurrency trading and investment activities, citing concerns that these could lead to financial instability and illegal activities such as money laundering and fraud.

This opinion provides an important distinction in China’s stance on cryptocurrency. While Beijing has long viewed cryptocurrencies as a threat to financial stability, banning commercial activities related to them since 2017, personal ownership has remained largely unregulated.

Despite efforts by the government to tighten control over virtual currency exchanges and transactions, including a 2021 crackdown by the People’s Bank of China, the personal possession of cryptocurrencies remains legal, offering some clarity for individual holders amidst the ongoing debate over their role in the financial system.