China's People's Court Daily recently published a landmark article clarifying the legal status of virtual currencies under Chinese law. The judicial analysis confirms that virtual currencies possess economic attributes qualifying them as legitimate property, with current policies not classifying them as illegal items.
Legal Recognition of Virtual Currency as Property
The Supreme People's Court's official publication The Identification of Virtual Currency's Property Attributes and Disposal of Case-Related Assets provides crucial judicial guidance:
Economic Attributes Establishing Virtual Currency as Property
Inherent Use Value:
- Functions as settlement media in blockchain applications (e.g., securities clearing systems)
- Serves as tamper-proof digital certificates (e.g., event tickets, voting records)
- Maintains utility despite lacking official currency status
Demonstrated Exchange Value:
- Global acceptance through blockchain networks with ~30,000 crypto ATMs worldwide
- Stablecoins (e.g., USDT) enhance practical payment functionality
- Recognized as legal tender in 73 jurisdictions including Japan and Australia
Judicial Precedent:
- Theft of virtual currencies prosecuted as property crimes per Supreme Court interpretations
- Distinguishable from computer crime charges when ownership rights are primarily violated
Current Legal Policy Framework
Regulatory Classification:
- 2013 Five Ministry Notice defines Bitcoin as "specific virtual commodity"
- Civil Code Article 127 provides basis for virtual property protection
Transaction Policies:
- 2021 Ten Department Notice prohibits commercial exchange operations but doesn't ban personal transactions
- Non-commercial trades remain valid unless violating public order
Judicial Practice:
- Civil courts invalidate professional trading contracts but preserve property rights
- No administrative confiscation of transaction amounts in adjudicated cases
Case-Related Asset Disposal Principles
The court advocates differentiated treatment of virtual currency assets in legal proceedings:
Standardized Disposal Approaches
| Scenario | Disposition Method | Legal Basis |
|---|---|---|
| Theft/Victim Not Trading | Full restitution to victim | Property rights protection |
| Fraud/Victim Trading | Partial restitution considering fault | Civil-criminal consistency |
| Illegal Proceeds | Full confiscation | Public interest protection |
👉 Understanding China's evolving crypto regulations
Implementation Guidelines
Direct Victim Compensation:
- Return unconverted virtual currencies
Calculate restitution using:
- Perpetrator's liquidation price
- Victim's purchase cost
- Comparable market rates
Balanced Public Interest:
- Confiscate proceeds from repeated/unexplained transactions
- Auction confiscated assets through approved international channels
Forensic Challenges:
- No valuation for untraceable assets (domestic price benchmarks unavailable)
- Crime recognition without monetary quantification when appropriate
Judicial Implications for Crypto Holders
This ruling establishes critical protections:
- Confirms legal ownership rights for compliant holders
- Prevents blanket confiscation of properly obtained assets
- Creates structured process for recovering stolen funds
Key Judicial Considerations
- Property Rights
Virtual currencies enjoy equal protection with traditional assets - Transaction Legality
Personal transfers maintain validity absent financial violations - Remedial Measures
Courts must balance victim compensation with public welfare
👉 Navigating China's crypto legal landscape
Frequently Asked Questions
Q: Does this mean crypto trading is legal in China?
A: The ruling protects ownership rights but maintains bans on professional exchange operations. Personal peer-to-peer transfers may proceed if not involving illegal financial activities.
Q: How can victims recover stolen cryptocurrency?
A: Courts may order restitution through: (1) direct return of unconverted assets, (2) monetary compensation based on verifiable valuation methods, or (3) partial recovery considering victim fault.
Q: What happens to confiscated crypto assets?
A: Authorities may liquidate through approved international market channels, with proceeds deposited into state accounts.
Q: Can businesses accept crypto payments now?
A: No. The decision addresses property rights, not payment systems. RMB remains the exclusive legal tender for commercial transactions.
Q: How are crypto values determined in court?
A: When available: (1) actual transaction prices, (2) perpetrator's liquidation records, or (3) comparable market rates. Domestic valuation remains unavailable.
Q: Does this affect NFT legality?
A: The principles may extend to NFTs demonstrating clear property attributes, but specific regulations await further judicial clarification.