Recently, Chinese courts have declared that cryptocurrencies qualify as legal property. This recognition has emerged despite the 2021 crackdown on crypto trading and mining in China.
Crypto in China: From Official Bans to Legal Acceptance
The People’s Court’s recent report sheds light on this new perspective towards digital assets. They assert that these assets hold economic value and, thus, merit protection as legal property. This acknowledgment seems paradoxical, especially since China prohibited all cryptocurrency transactions in September 2021, following a mining ban in June of the same year. Further, China initially prohibited all cryptocurrencies in June 2019, by cutting off access to related exchanges.
This recent ruling by the People’s Court has significant implications. It indicates that crypto holdings remain immune from confiscation. Moreover, digital asset offenses demand a different judicial approach than those concerning conventional property.
Compared to the court’s ruling, Beijing’s recent actions exhibit a stern stance. Case in point: a life sentence was handed to a former senior official from Jiangxi province. Charged with accepting bribes related to unsanctioned support for crypto mining companies, Xiao Yi reportedly guided these enterprises in concealing their mining pursuits. Instead, they masqueraded as data analytics firms during audits.
The Continuing Crackdown on Digital Assets
This severe penalty underscores Beijing’s relentless campaign against digital asset endeavors. Nevertheless, it’s essential to differentiate between the legality of cryptocurrencies and Beijing’s clampdown on illicit digital asset activities.
Diverging from Beijing’s rigid posture, Hong Kong has embraced a more lenient approach by sanctioning licenses for cryptocurrency exchanges. As a special administrative area with a history of seeking increased autonomy, Hong Kong‘s moves often signal broader shifts. Many believe it’s testing the waters for Beijing’s future cryptocurrency policies. If Hong Kong’s foray into crypto proves successful, the Communist Party might gradually adopt a similar stance. Yet, such optimism might be premature.
Contrary to the official narrative, experts observe that China’s crypto ban hasn’t been ineffective. Despite the prohibitions, China remains dominant in the global cryptocurrency market.
China’s relationship with cryptocurrency remains multifaceted. The nation juggles recognizing its value and imposing strict regulations on its operations. This intricate balance, reflecting the country’s strategic approach to digital assets, will undoubtedly shape the future trajectory of global crypto policies.
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