In a landmark decision, a Shanghai court has officially stated that possessing cryptocurrencies on a personal level does not breach Chinese regulations.
This surprising clarification has provided much-needed legal reassurance for individuals holding digital assets in mainland China, indicating a change in the country’s approach towards virtual currencies.
Coinciding with this announcement was a remarkable surge in the value of Bitcoin (BTC), nearing the $100,000 threshold and sparking further speculation.
Insights from Judge Sun Jie
Furthermore, Judge Sun Jie from the Shanghai Songjiang People’s Court recently shed light on the legal status of cryptocurrency holders in China.
In an official statement shared on the Shanghai High People’s Court WeChat account, Sun affirmed,
“Individuals’ possession of cryptocurrency is not against the law.”
Despite the standing prohibition on crypto transactions initiated in 2021, this ruling marks a significant distinction in law. It underscores that owning digital assets personally does not violate Chinese legislation, even amid ongoing restrictions on crypto trading.
To differentiate between ownership and trading of cryptocurrencies, Sun pointed out,
“Therefore, regulations consistently target and crack down on speculative practices within cryptocurrency trading.”
This clarification was issued during a case assessment concerning a legal dispute between two firms related to an Initial Coin Offering (ICO), which remains banned in China, along with cryptocurrency mining.
Cryptocurrency Landscape in China
For context, in 2021, the Chinese government imposed a ban on cryptocurrency transactions and Bitcoin mining following Bitcoin’s surge to $64,000, which was later followed by a considerable market correction leading to Bitcoin plummeting to $30,000.
Despite the ban, Chinese citizens continued to hold and trade cryptocurrencies using foreign exchanges.
Many observers speculate that China’s recent actions could be a response to the previous administration of US President Donald Trump aiming to position the US as a prominent crypto hub globally.
Yet, it’s crucial to acknowledge China’s substantial influence in the cryptocurrency sphere, as it still commands more than 50% of the global Bitcoin hash rate, primarily dictating mining activities.
Moreover, Chinese investors are exploring alternative methods to participate in crypto investments, raising questions about China’s strategic roadmap in the long run.
Hence, the recent call by former Vice Minister of Finance Zhu Guangyao for the government to reconsider its stance on cryptocurrencies reflects the intricate dynamics surrounding China’s role as global trends and policies shift.
What’s Next?
In essence, Eliézer Ndinga, Vice President at 21Shares, emphasized the long-standing consistency in China’s legal standpoint regarding cryptocurrencies.
While individuals have always had the liberty to own cryptocurrencies, commercial crypto activities like trading and mining have remained banned for a significant period.
He aptly remarked,
“There’s no equivalent to the 1933 US Executive Order 6102 banning the possession of gold in China.”