Bitcoin and crypto ownership in China have been debated and have raised policy questions for years. But a recent Shanghai court ruling clarified that it’s perfectly legal for citizens to hold, buy, and sell Bitcoin or other cryptocurrencies.
Judge Sun Jie of the Shangai Songjiang People’s Court explained in an article via WeChat that it’s not illegal for Chinese citizens to hold cryptos, even though the courts have already ruled that business entities are not allowed to keep, buy, or sell cryptocurrencies at will. Jie’s insights were part of a case review on a lawsuit involving two companies in an initial coin offering that’s illegal in the country.
Coin Offerings Remain Illegal
Judge Sun Jie’s comments were part of a case review involving two companies engaged with digital assets in 2017. According to records, an agricultural company expressed its intention to finance a digital asset. It then worked with an investment company to draft its whitepaper and issue the tokens.
A Shanghai court has released an opinion stating that the personal ownership of cryptocurrencies is not against Chinese law, offering explicit legal clarity for crypto holders on the mainland amid a record-setting bitcoinprice surge.
Sun Jie, a judge at the Shanghai Songjiang… pic.twitter.com/NfclXYh3o7
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Then, the agricultural company approved a Blockchain Incubator Agreement with the investment firm. After drafting the token’s whitepaper, the investment company was paid 300,000 Yuan for its services. Under this premise, the agricultural company expected that the investment firm would release the tokens. It was the start of a misunderstanding, leading the company to seek a full refund.
Planned Token Financing And Release Is ‘Potentially Illegal’
In Judge Jie’s notes, the planned financing and release of these tokens are potentially illegal. The planned initial coin offering falls under unlawful public financing. The court has ruled that no organization or individual can illegally finance or issue digital assets.
The complaint of the agricultural company is deemed invalid by the court since the planned financing and token release would have been illegal. Still, the court instructed the investment firm to reimburse 250,000 yuan after careful evaluation.
Court Raises Risks Of Cryptocurrencies
In the same notes, Judge Sun Jie explained that holding cryptocurrencies is not illegal. However, she explained that the Chinese government imposes strict restrictions because of the risks involved.
However, the rules on cryptocurrencies change in business since crypto use can impact the financial and economic order. Judge Sun Jie says these are the primary reasons why Chinese laws impose strict rules on the use of cryptocurrencies.
China first banned initial coin offerings and closed online crypto exchanges in 2017. The authorities continued their campaign against crypto in 2021 and even banned mining and other cryptocurrency-related businesses.
Featured image from DALL-E, chart from TradingView
