Virtual Asset Legality in China

A People's Court in China recently released a comprehensive report that meticulously analyzes the multifaceted legality of virtual assets, delving deep into the intricate nuances of these digital holdings. Within the annals of this report, it is explicitly articulated that, under the prevailing legal policy framework, virtual assets firmly retain their designation as legitimate property, enjoying the protective embrace of the law.

The People's Courts of the People's Republic of China, operating with an unwavering commitment to judicial independence, stand as bastions impervious to the whims of administrative or public entities. These august courts preside over a wide spectrum of cases, ranging from the criminal and civil to the administrative and economic, lending credence to their impartial and rigorous jurisprudence.

The report, bearing the distinguished title "Identification of the Property Attributes of Virtual Currency and Disposal of Property Involved in the Case," extends its gracious acknowledgment to the economic attributes inherently ingrained in virtual assets, thereby underscoring their rightful classification as bona fide property. In defiance of China's sweeping prohibition on foreign digital assets, this meticulous report advances a persuasive argument asserting that virtual assets privately held by individuals should, without reservation, be recognized as legally sanctioned and, consequently, be entitled to the full protection of the law within the existing policy framework.

Furthermore, the report offers sagacious recommendations for the prudent management of criminal activities intertwined with virtual assets. It posits that the resolution of such cases, owing to the infeasibility of asset confiscation, necessitates a harmonious amalgamation of criminal and civil law principles. This harmonious approach seeks not only to safeguard individual property rights but also to conscientiously uphold the paramount interests of society and the public.

China's unyielding resolve in imposing an all-encompassing embargo on cryptocurrency-related activities and its categorical ban on foreign cryptocurrency exchanges catering to mainland clientele are well-documented. Nevertheless, despite this adversarial backdrop, Chinese courts have, over time, adopted a notably divergent stance on the subject of Bitcoin (BTC) and other digital assets.

The initial seeds of this disparity sprouted in September 2022 when a legal luminary suggested that Chinese cryptocurrency holders could indeed invoke the protective mantle of the law in instances of theft, misappropriation, or breaches of loan agreements, steadfastly countering the overarching crypto ban. Subsequently, in May 2022, a Shanghai court issued a resounding decree, affirming Bitcoin's rightful classification as virtual property, thereby affording it the corresponding shield of property rights.

China's historical stance vis-à-vis Bitcoin and cryptocurrencies, though once unwaveringly hostile, has undergone a palpable transformation in recent years. This transformation finds its emblematic expression in the remarkable resurgence of China's Bitcoin mining sector, which, following its precipitous decline in the wake of the blanket ban, has ascended with remarkable alacrity to claim the coveted second position within a span of a mere year.