Crypto Comeback in China? Justin Sun’s Legal Victory Sparks Hope

Key Takeaways

• China’s 2021 crypto ban significantly impacted the market, causing a Bitcoin price plunge and forcing miner relocation.
• While China restricts crypto exchanges, individual ownership and private trading aren’t explicitly illegal.
• Tron founder Justin Sun’s defamation lawsuit win and Hong Kong’s crypto-friendly policies raise questions about a possible softening of China’s stance.

In 2021, China’s sweeping ban on cryptocurrencies triggered a massive 50% plunge in Bitcoin’s value and forced cryptocurrency miners to exit the country.

The government positioned this drastic measure as necessary to curb financial crimes and secure the financial system, significantly altering the landscape of global cryptocurrency regulation.

Since the ban, there has been ongoing speculation about a possible softening of China’s stringent crypto policies, especially in light of Justin Sun’s recent legal triumph. 

Sun Wins Defamation Case, Sparking Debate on China’s Crypto Stance

In June, Tron founder Justin Sun won a massive defamation lawsuit in the People’s Court of China against the Chongqing Business Media Group, which had accused him of fraudulent activities.

Sun’s legal victory is now raising questions about whether it could signal a shift in China’s stringent anti-crypto policies. Despite prevailing skepticism about the impartiality of Chinese courts and the nation’s critical stance on cryptocurrency, Sun’s win challenges the notion that crypto-related issues are consistently dismissed or negatively prejudged by the legal system in China.

In an interview, Sun conveyed that his legal success should not be a surprise. He suggested that the perception of China as vehemently anti-crypto might be overstated and unreflective of the actual legal framework and enforcement practices.

Sun, furthermore, boldly compared China’s cryptocurrency policies to those of the US, suggesting that despite the perception of some regulators as conservative, there is no overt discriminatory policy against cryptocurrencies in China. This perspective contrasts the well-documented skepticism China has shown towards digital assets.

China’s Crypto Crackdown: A Nuanced Picture Emerges – Owning Crypto Not Banned, But Risky

Despite frequent portrayals in Western media of China’s sweeping ban on cryptocurrencies, the reality is more nuanced.

According to legal insights from a Fujian province court document and a detailed analysis by a Chinese law firm, while China has stringent regulations against cryptocurrency exchanges and financial institutions dealing in crypto, individual possession and private trading of cryptocurrencies are not explicitly illegal.

However, these activities are not afforded legal protection, leaving them in a precarious position. The discourse emphasizes that while administrative laws and policies severely restrict crypto-related activities, they do not wholly outlaw the holding or trading of cryptocurrencies like Bitcoin.

2021 Crypto Ban – Immediate Impact and Global Influence on the Crypto Sector

The 2021 cryptocurrency ban was part of the Chinese government’s broader effort to control financial risks and eliminate competition with its upcoming Central Bank Digital Currencies (CBDCs) initiative. Chinese authorities were also concerned about the environmental impact of mining operations and the potential for cryptocurrencies to facilitate financial crimes.

The ban prompted a mass exodus of miners due to the country’s previously advantageous mining conditions, such as an abundance of cheap electricity. This shift forced many mining operations to relocate, disrupting the mining landscape worldwide.

The global response varied, with some regions becoming more welcoming to displaced miners and other crypto businesses seeking new bases of operation. The ban also influenced other governments to reconsider their stance on cryptocurrency regulation, with some tightening restrictions while others sought to attract crypto businesses.

Despite the initial shock and market downturn, the long-term effects on global cryptocurrency prices have been muted, thanks in part to continued adoption and innovation in the sector. Some analysts believe that while the ban curtailed operations within China, it did little to dampen global cryptocurrency enthusiasm, as evidenced by subsequent market recoveries and innovations in crypto products and services outside China​.