In a recent ruling, the Shanghai High Court stated that cryptoassets have “property attributes,” and Chinese law does not prohibit them outright. However, these protections only exist for crypto as a commodity, not as currency or business instrument.
These comments came in a fraud case involving two businesses and a failed token launch, and the Court condemned their actions in very strong terms.
China’s Harsh Crypto Policy
According to a new WeChat post, this ruling came adjacent to a dispute between an unnamed agricultural development company and an investment management firm, and an agreement to issue virtual currency.
“Raising so-called ‘virtual currencies’ such as Bitcoin and Ethereum from investors through illegal issuance and circulation of tokens…is essentially an act of illegal public financing without approval. Therefore, no organization or individual may engage in illegal token issuance and financing activities,” the High Court ruled.
However, this ruling was not the High Court’s only judgment on the case. Although it took a very harsh view of the core dispute between these two companies, the ruling stressed that these weren’t crypto’s only uses.
The Court claimed that cryptocurrency held value as a commodity, and no prohibitions exist on this usage.
China’s Changing Paradigm?
Since China’s 2021 Bitcoin mining ban, the international space has held a strong interest in bringing crypto back to this huge economy. Earlier this year, Hong Kong approved its first Bitcoin ETF, opening mainland investors to Bitcoin exposure.
Additionally, China supported crypto and blockchain technology for cross-border payment solutions at the BRICS Summit. Russia spoke more bullishly about crypto as a whole than China, but China has used crypto for Russian trade.
The country also has a CBDC, the digital yuan, which is actively being used for other international trades.
Additionally, US President-elect Donald Trump officially proposed using Bitcoin to counter Chinese economic influence. Justin Sun, Chinese citizen and Tron founder, recommended that China embrace this technology. Sun expressed that China’s strict restrictions to industry might lead to other countries gaining a decisive technological advantage.
Despite this, there’s little sign of a broader shift in China’s stance on crypto. While the High Court acknowledged that cryptocurrencies could have some legal applications, it dealt harshly with the case at hand.
Allegedly, the investment manager in this case defrauded their partner to fund a token launch. The Chinese Court saw this as an inherent risk of working with cryptocurrencies.
The Court emphasized that using crypto for major business transactions, especially for launching new tokens, remains strictly forbidden. It went as far as stating that Bitcoin could disrupt the financial system and serve as a tool for illegal activities. This reflects how firmly entrenched China’s anti-crypto stance remains in its official policies.
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