Chinese Arbitration Court Rules Bitcoin Is Legal Property
Despite the central bank’s blanket ban on crypto trading in China, Shenzhen Court of International Arbitration( (SCIA) has recently ruled that bitcoin and some of its ‘younger siblings’ are protected by law as legal property, and Chinese citizens are not barred from owning and transferring them.
The SCIA published a detailed analysis of a contract dispute which was related to the possession and transfer of digital assets on October 25 via WeChat.
According to the case analysis, the unnamed plaintiff signed a contract agreement with the defendant, which allowed the latter to trade and manage a cryptocurrency portfolio on behalf of the former. The cryptocurrency portfolio under management included 20.13 bitcoin, 50 bitcoin cash, and 12.66 bitcoin diamond,worth more than $490k combined.
However, the defendant refused to return these assets, and argued that the agreement against him was invalid on the ground that the central bank’s ban on cryptocurrency trading and ICO activities issued last September means crypto transactions and payments should be illegal in China and virtual currencies have no legal tender status. Further, the defendant added that with the trading ban, there was no venue available to transfer the virtual currency back to the plaintiff as stipulated by the contract.
The arbitrator sided against the defendant by ruling that Chinese laws do not forbid owning or transferring bitcoin and other cryptocurrencies. “ Though bitcoin is not a legal currency,it is no doubt that it deserves protection by law as property. Bitcoin has property attributes and economic value which can bring economic benefits to parties,” the court claims.
Further, the arbitrator stated that there was no technical barriers for the defendant to send bitcoin and several of its hard forks as long as both parties had bitcoin addresses and private keys. The court opined that the case was about the contractual obligation for returning cryptocurrencies, which was not limited by the trading ban.
In fact, this is not the first time for courts in China to rule that virtual currencies which are viewed as “property” are protected by law. In late September, Shanghai Hongkou District Court has claimed that Ether,Ethereum’s native token, as a property in the general legal sense is under the protections of Chinese laws.
The court’s rulings show that they are still in place to protect Chinese crypto investors’ right to own and transfer cryptocurrencies. But it does not mean Chinese authorities will relax regulations on cryptocurrency trading in the near future.