China was once the world’s biggest Bitcoin mining center, until the government decided to push miners out of the way. Since then, there’s been plenty of talk about legalizing cryptocurrencies, but no move was made. While Bitcoin is still banned, a new ruling from the Shanghai People’s High Court may give us insight on the country’s future plans.
With various laws that banned mining and Bitcoin transactions since 2021, there wasn’t much hope for crypto in China. That’s why the Shanghai court ruling might come as surprising. This is not a local court with no pull in China’s laws – the Shanghai High People’s Court is the highest court in a Chinese province, so it’s ruling on matters is pretty important.
If it says that Bitcoin has economic value, it certainly does.
The Court Recognized Bitcoin as a Virtual Valuable Asset
The High People’s Court just formed a unified opinion on Bitcoin’s legal position in China as a virtual asset. Moreover, it recognized that it has economic value, which is a first in the Asian country. The High Court is directly controlled by the government and has a very similar structure to the Supreme Court, which is only a level up.
If you’re wondering what made the court recognize Bitcoin as a virtual asset, it was a case of fighting over one Bitcoin. The case in question was filed by Cheng Mou, who asked for another person, Shi Moumou to return a single Bitcoin to him. They couldn’t come to an agreement as Moumou didn’t want to return the Bitcoin, so Mou took him to a court. This happened in 2020 with the case open at the Shanghai Baoshan District People’s Court, which ruled that Moumou should return the Bitcoin.
However, he refused to do so, leaving the case to move up to the Shanghai High People’s Court. The new ruling officially declared Bitcoin a virtual asset with economic value, which is a significant precedent for how the government sees cryptocurrencies. While it has discouraged trading and mining, the court’s ruling could eventually put further central bank’s rulings into question.
What Happens Now?
While the High Court’s opinion on Bitcoin and crypto changes things, they won’t go live in China right now. Nothing will probably change from a legal point of view, but the ruling certainly raised a few eyebrows.
Virtual currency-related businesses are outright banned in China, but this new ruling could change the future stance of Chinese law. It certainly shows that kind of promise whenever a law officially recognizes a cryptocurrency as a virtual asset. If it holds economic value, any central bank rulings might be brought into question by businesses who want to trade virtual assets.
Of course, there’s still a long way to go before China officially recognizes Bitcoin. Pessimists say that it’ll never happen, but with the shape the world’s been lately, who knows? One or two similar court rulings and the government might give cryptos a shot.