First, it cannot be regarded as virtual property within the meaning of Article 127 of the general principles of civil law. Virtual goods are not a legal term. The only similar concept in law is virtual property in section 127 of the General Principles of Civil Law. Article 127 of the “General Principles of Civil Law” provides that if the law contains provisions on the protection of data and virtual ownership of the network, these provisions must be followed. However, the “General Principles of Civil Law” do not contain specific provisions on the scope and connotation of virtual property. It simply states that the protection of virtual property must be prescribed by law and that the specific protections of virtual property are entrusted to other laws. Since there is no law regulating Bitcoin in our country, it cannot be recognized as virtual property in the “General Principles of Civil Law”. Do you have questions about cryptocurrency, digital currencies or blockchain technology? Freeman Law can help you with digital currencies, tax planning, and tax compliance. Contact us now to schedule a consultation or call (214) 984-3410 to discuss your concerns about cryptocurrency and blockchain technology. This ban is part of a nationwide crackdown on the form of currency. The Chinese government considers it a volatile investment and fears it could be used for money laundering.
The People`s Bank of China said that “[cryptocurrency] seriously threatens the security of people`s assets.” First of all, clarifying Bitcoin`s legal characteristics is a prerequisite for the case. Bitcoin itself is a digital currency, so it can be protected by law as common property. However, due to its inherent shortcomings, it is difficult to be legal tender. As long as the State has not authorised its use as legal tender, its activities as legal tender are not authorised by national law. In summary, the State does not prohibit Bitcoin`s activities as virtual goods, with the exception of activities that Bitcoin carries out as legal tender and the activities referred to in paragraph 3. Wes Fulford, CEO of investment advisory firm Viridi Funds, said that some forms of cryptocurrency, particularly Bitcoin, have shown resilience compared to others, such as Ether. Altcoins such as Dogecoin, Solana, and Ripple also fell. In the dispute over the purchase contract between Tan Moyuan and Tan, the Court of First Instance held that due to the illegality of the subject matter of the dispute, π the coin itself, transactions concerning the object are not protected by law. Therefore, the legal relationship between Tan Mou and Tan Mouyuan regarding the contract for the sale of “π parts” should be considered invalid and the goods acquired as a result of the contract should be returned to each other. The Court found that the application of the law by the court of first instance was erroneous.
The Court of Second Instance stated that: from the “announcement”, although the behavior of citizens trading virtual currency is personal freedom, this behavior is not protected by law in my country, the consequences and risks caused by the transaction should be borne by the investors themselves. Second, understanding the country`s policy documents is critical to a case decision. To understand “communication” and “announcement”, there are two points to consider: first, the main part of the national regulation is “financial companies”, “token finance trading platforms”, “financial institutions and non-bank payment institutions” and not general civil and commercial entities; Second, prohibited transactions are activities involving Bitcoin as a currency. If Bitcoin does not engage in activities as a currency, it is not a transaction prohibited by the state. For example, the two sides agreed in the legal battle decided by the Shenzhen International Court of Arbitration over the return of Bitcoin. Here, Bitcoin only serves as general property. Therefore, the transaction does not infringe the relevant national rules and should be valid. In the dispute regarding the purchase agreement between Tan Moyuan and Tan, both parties participated in a purchase transaction between RMB and π, which directly violated the relevant provisions of the “Announcement”. Therefore, the transaction was illegal.
However, it should be noted that even though this is the transaction between legal tender and Bitcoin, it is necessary to distinguish whether Bitcoin is used as an exchange between currency and legal tender, or whether it is purchased by legal tender as general property. In the United States, HashFast Manager v. In the case of MarcLowe, the crux of the matter is whether Bitcoin is a currency or a property. In response, several cryptocurrency companies have announced that they will stop providing services to people in China and block Chinese IP addresses. The announcement also affects all Chinese citizens working for cryptocurrency companies overseas, as their roles are now illegal and can be prosecuted. The Shenzhen International Court of Arbitration concluded in the share transfer agreement dispute that the Bitcoin return agreement between individuals does not violate mandatory provisions of laws and regulations and should not be considered invalid. Chinese laws and regulations do not prohibit the private ownership and legal circulation of Bitcoin. Bitcoin can be the object of delivery. Bitcoin is not legal tender and does not prevent it from being legally protected as property. Bitcoin has property attributes, can be dominated and controlled by humans, has economic value, and can bring economic benefits to parties. That is the unanimous intention of the parties and it does not violate the law.
China had previously banned initial coin offerings, the cryptocurrency equivalent to the IPO of shares by companies. It then took steps to restrict how Chinese financial institutions deal with cryptocurrencies and crypto assets. The last step is much broader. All domestic cryptocurrency transactions are now banned. In principle, such transactions can be carried out without the direct knowledge of the government. But few Chinese citizens or financial institutions are likely to risk the wrath of the government. Bitcoin, the original cryptocurrency, once powered illegal transactions on the dark web and now makes it easier to pay for ransomware attacks. Bitcoin has now been shown to not work well as a medium of exchange for everyday transactions. Its value is unstable and the Bitcoin network cannot process a large volume of transactions quickly and inexpensively. In the contractual dispute between Zhongya Smart Digital Technology (Shenzhen) Co., Ltd. and Changsha Shengda Industrial Co., Ltd., the court declared that the validity of the “point comparison agreement” at issue in this case was invalid due to the violation of mandatory legal provisions. Bitcoin mining machine purchase disputes are mainly disputes caused by the purchase of Bitcoin mining machines between individuals.
Specific cases include: the dispute over Zhang`s purchase contract and the first domestic dispute over the bitcoin mining machine. When it comes to purchase disputes on Bitcoin mining machines, the current judgments on these disputes are more consistent. The mining machine itself, as a type of commodity, is not prohibited by laws and regulations. Therefore, the purchase of mining machinery is legal and efficient. Mining equipment disputes are synonymous with the resolution of general disputes relating to the sale of goods. 1. Based on Bitcoin`s legal attributes, strictly distinguish the type and types of Bitcoin transactions prohibited by the state The lawyer referred to a recent court case in China involving a loan violation in the Litecoin (LTC) cryptocurrency. Defendant Ding Hao has not fully repaid the LTC 50,000 he borrowed from Zhai Wenjie in 2015, becoming an important precedent related to cryptocurrency in China. Since 2015, the price of Litecoin has risen by about 1,800%, as the cryptocurrency was trading at around $3 seven years ago, according to data from CoinGecko.
China Briefing is written and produced by Dezan Shira & Associates. The practice supports foreign investors in China and has done so since 1992 through offices in Beijing, Tianjin, Dalian, Qingdao, Shanghai, Hangzhou, Ningbo, Suzhou, Guangzhou, Dongguan, Zhongshan, Shenzhen and Hong Kong. Please contact the company for assistance in China at [email protected]. (1) Bitcoin is not legal tender. Both the “notice” and the “announcement” indicate that Bitcoin is not a currency, is not issued by the monetary authority, does not have monetary characteristics such as legal compensation and coercion, does not have the same legal status as the currency, and cannot and should not be used as currency in the market.