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Chinese Court: Bitcoin is Ruled as a Legal Property But Not a Currency

On May 6, a case of foreign-related bitcoin property damage compensation was publicly adjudicated in Shanghai No. 1 Intermediate People’s Court, in which the court determined bitcoin as legal virtual property. All bitcoin obtained through illegal means in the case should be returned or discounted for compensation.

The court thinks bitcoin is featured with value, scarcity, and controllability, owning the characteristics of right object and the commodity attribute as virtual property. It is reported that 18.88 bitcoins are involved in the case, according to the report of People’s Court Daily.

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Case review

The accused (Malaysian nationality) went to the residence of the victim (American nationality) and forcing them to transfer 18.88 bitcoin to the account designated by the accused.

The court ruled that the accused returned 18.88 bitcoin and to the victim. If they won’t, bitcoin would be compensated at the price of 42206.75 Chinese yuan according to the closing price of bitcoin on that day published by CoinMarketCap.com on June 12, 2018.

Early in 2018, the Hangzhou Internet court held that bitcoin has a “commodity attribute” and can be purchased as a commodity recipient in accordance with the law. In 2019, the court further held that bitcoin belongs to the virtual property and should be protected by law.

The court also reiterated the national policy: up to now, it is strictly prohibited for any platform or institution to engage in the business for fiat money – cryptocurrency, or to buy or sell token or cryptocurrency as a central counterparty, or to provide services such as pricing and information intermediary. That is to say, in principle, the value conversion between bitcoin and RMB is not supported by the authority.

The core meaning behind the prohibition of ICO fund-raising in China is that China has always denied the currency attribute of bitcoin, which means Bitcoin can’t be circulated in the market as money, that is to say, it can’t be used as money to purchase goods, and it can’t be exchanged with RMB according to law. The legal digital currency can only be DC / EP issued by the central bank in the future.

In a word, the legal holding of bitcoin has never been prohibited in China, and bitcoins commodity property and corresponding property rights and interests have been affirmed. The reason why the official nearly mention it is protecting the public from the high investment risks.

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