Key Takeaways
- A Shanghai Songijang People’s Court judge has argued that Bitcoin and cryptocurrencies should be considered personal property. Judge Sun Jie said that Chinese individuals are permitted by law to hold digital currencies.
- China banned initial coin offerings (ICO) and ordered all crypto exchanges in the country to shut down in 2017. Four years later, the government declared all crypto assets and related activities illegal.
- Hong Kong, a special administrative jurisdiction of China, has embraced crypto assets. The city-state allows crypto transactions and offers exposure to the asset class for mainstream investors through crypto ETFs on the Hong Kong Stock Exchange.
- There is a growing belief that China could soon loosen its grip on the crypto sector as the U.S. is prepared to embrace the niche under President Donald Trump’s administration.
A Shanghai court has officially declared that personal ownership of cryptocurrencies is not against Chinese law, asserting that the asset class has all the characteristics to be considered a property.
The legal clarity offered to crypto holders in mainland China comes amid a record-breaking surge in the price of Bitcoin and other major cryptocurrencies like Ripple (XRP) and Solana (SOL) over the past couple of weeks.
Chinese Judge States Cryptocurrency Ownership Is Permissible By Law
Sun Jie, a judge at the Shanghai Songjiang People’s Court, made his opinion in an article published on the Shanghai High People’s Court’s official WeChat account, where he said that it is “not illegal” for Chinese residents to hold cryptocurrency. However, business entities in the country are not allowed to issue cryptocurrencies or make investments “at will”.
His comments came as part of a case review involving a legal dispute between two companies about an initial coin offering (ICO), a financial activity considered illicit financing in China. However, the government still views cryptocurrencies as a threat to the nation’s financial stability, with commercial activity related to these assets deemed illegal.
China first banned ICOs and ordered the closure of all crypto trading platforms in 2017. In 2021, the government ramped up its crackdown by banning all Bitcoin mining activities and declaring crypto-related business illegal.
The ban was issued after Bitcoin’s price had risen to $64,000, resulting in a massive disappearance of capital from traditional markets into the crypto market. At the time, China was the global leader in Bitcoin mining operations, and the country’s blanket ban caused the apex cryptocurrency’s price to plummet to $30,000 within a month as crypto-related businesses, including miners and exchanges, began shifting their operations to countries with friendlier policies.
However, BTC managed to recoup its losses not much later and skyrocketed to an all-time high of $69,000 by the end of the year. Despite the regulatory crackdown, Chinese residents never stopped owning cryptocurrencies. After a period, they began trading digital currencies using foreign-registered exchanges.
While the ban is still officially in place, the Shanghai People’s Court has stated that consumers are permitted by law to own crypto assets.
In a case that is seen as a major setback for crypto advocates in China, recently an official of the People’s Bank of China was found to have engaged in bribery using cryptocurrency, as reported by the Central Commission for Discipline Inspection of the Community Party of China.
The official in question is Yao Qian, the first director of the Chinese Central Bank’s digital currency research institute, who previously made friendly remarks about crypto assets. He abused his powers and illegally accepted valuable gifts to turn a blind eye to the illegal behavior of some crypto users and companies.
Hong Kong’s Embrace of Crypto Could Lead To China Loosening Its Grip On The Market
Even before Sun Jie’s comments, there has been an understanding among industry players that Chinese individuals are allowed to hold cryptocurrencies by law. Some local courts have also made rulings in the past arguing that the digital asset class should be treated as property protected under the country’s legal and policy framework.
Despite the progress, there has been no indication that Beijing plans to loosen its grip on the crypto sector, even after experts are pleading for the government to open up the market.
Former finance vice-minister, Zhu Guangyao, said in September that crypto is crucial for China’s digital economy and that the country has a lot of catching up to do as the U.S., under Donald Trump, will embrace the industry.
However, things are slightly different in Hong Kong, which is a special administrative region of China that is technically not a part of the mainland but falls under its jurisdiction. Beijing often utilizes Hong Kong as a trailblazer to test new initiatives.
It is legal in Hong Kong to buy and sell cryptocurrencies, so much so that the city-state’s stock exchange offers mainstream investors exposure to the market via exchange-traded funds (ETFs) tracking the price of Bitcoin (BTC) and Ethereum (ETH). There is an increasing possibility that Beijing may be considering removing its crypto ban based on the industry’s operations in Hong Kong.
This week, Bitcoin has seen its price soar to $99,000 for the first time amid excitement surrounding the re-election of Donald Trump. During his campaign, the President-elect promised to support the industry and establish a national Bitcoin reserve under the U.S. Treasury.
Bitcoin Crosses $99,000 On Its Way To The $100,000 Milestone
