China is not a bitcoin-friendly country as it has taken a slew of measures to kill the flagship cryptocurrency, which include imposing a blanket ban on all initial coin offerings (ICO) and shuttering crypto exchanges. But the latest order by Hangzhou Internet Court suggests that owning bitcoin is not illegal in China as it gave the flagship cryptocurrency the status of a “virtual property.”
The Hangzhou Internet Court was conducting a trial in a bitcoin property infringement dispute. It came to the conclusion that bitcoin be treated as virtual currency because it carries value, is scarce, and can be used as a means of transferring value, as reported by Beijing-based magazine Caijing.
Responding to the court’s ruling, an official of the People’s Bank of China (PBOC) told Chinese daily newspaper Global Times :
“Indeed, Bitcoin is virtual property, but it’s not fiat money.”
The court’s ruling and the PBOC’s clarification makes it clear that owning bitcoin in China is legal, though this is not the first time that the country’s courts have taken such a stand.
Shenzhen-based Court of International Arbitration had ruled in October 2018 that bitcoin is protected under Chinese law thanks to its economic value and gave it the status of being a property.
The Shenzhen court’s ruling had established that circulating bitcoin and making payments using the cryptocurrency in China is not illegal. However, the government’s treatment of crypto exchanges, barring ICOs from the country, and looking to turn the screws on bitcoin mining in China indicates that there’s still a long way to go before it can become a bitcoin-friendly country.
One reason why China has railed against bitcoin is because it is decentralized and cannot be controlled by the country’s government. Of course, China doesn’t like such a thing and it has tried to rip apart the cryptocurrency ecosystem in the country step by step.
From banning bitcoin mining to finding a way to ensure that people can’t buy it, China is potentially gearing toward the launch of its own cryptocurrency. The country’s central bank has reportedly sped up the development of its own cryptocurrency to ward off the threat of Facebook’s Libra coin.
So enthusiasts in China shouldn’t get carried away by the Hangzhou and Shenzhen court rulings as the cryptocurrency is not making a comeback anytime soon. Of course, you can still buy the cryptocurrency using peer-to-peer platforms such as LocalBitcoins.
But don’t expect the Chinese government to welcome crypto exchanges with open arms as the authorities have been hostile toward bitcoin for a reason – the birth of a China-specific cryptocurrency.