A year ago, China reiterated its desire to push back crypto holders by banning possession. The new law was obviously pushed in favor of the People’s Bank of China which is planning to introduce its own virtual asset. But, 12 months later, things are much different. The ban hasn’t been lifted, yet crypto holders in China are still protected by the law.
To everyone’s surprise, China has not yet publicly banned the possession of cryptocurrencies. It has done so with swift resolve when it comes to mining, but you could still own Bitcoin in China and avoid arrest. Known as one of the world’s most hostile countries toward Bitcoin, China has previously banned crypto exchange operations in the country.
All Crypto Holders are Still Protected
Crypto holders in China at the moment are protected in case of theft, breach of a loan agreement, or misappropriation. This was confirmed by David Lesperance of the Lesperance & Associates law firm. He emphasized that crypto exchanges are still banned in China, but when it comes to holding Bitcoin, things are different.
Lesperance’s firm recently worked on a case involving a loan breach made in Bitcoin. The defendant didn’t manage to pay the 50,000 LTC borrowed, sparking a major court precedent that went public in China. After a lengthy battle, the Beijing No. 1 Intermediate Court ruled that the defendant, Ding Hao, owes the remaining amount of Litecoin to the lender, Zhai Wenjie.
Ding Hao smartly tried to circumnavigate the law with an argument that the People’s Bank of China officially banned crypto exchanges and transactions last year. However, the court has officially declared that Bitcoin and Litecoin are still considered property, even if created in the virtual realm. Ding Hao will now have to bite the bullet and pay the remaining Litecoin to Wenjie, which will be a bit of a headache considering today’s price.
When he took the loan of 50,000 LTC, it was worth $3 per coin. That was seven years ago. In the meantime, the price of LTC has jumped over 1,800%.
‘Don’t Draw Any Particularly Positive Inferences’
Lesperance said that the crypto community shouldn’t draw any positive inferences from this case. According to him, it was a commercial loan dispute settled under normal property law rules. However, crypto fans are holding onto it for dear life, interpreting it in another way. It shows that possession of crypto in China has not yet been banned, making the commercial trading of this property legal.
Many locals believe that the PBoC has never banned individuals from trading currencies. They believe the ban extends to crypto exchanges only. While we wouldn’t be so fast to try your luck, the latest case does show that things are much different than originally intended.
While crypto trading is not illegal, arguing with banks will be a big problem. They consider everything in regards to crypto illegal, so good luck on winning that case.