Despite China’s current ban on digital assets, the regulation of its cryptocurrency sector is still undergoing changes and advancements.
According to a report by Wu Blockchain on May 7, China’s Supreme Court has issued guidelines on cryptocurrency-related disputes. The guidelines state that it would be legally acceptable to settle a debt using a small amount of digital assets if both parties agree.
The court acknowledged that cryptocurrencies possess virtual properties within a network in this situation. However, it emphasized that this approach would only be allowed if there were no other valid reasons opposing it.
The court ruled that if the parties mutually agree to use a small amount of virtual currency to settle debts arising from exchanges, labor services, and other fundamental relationships, and if there are no other invalid reasons, the court will recognize the contract as valid.
The highest court further explained that if one party agrees to transfer cryptocurrencies to another party, but the receiving party is unable to fulfill their part of the agreement due to policy restrictions, the court will determine the compensation based on the actual value of the property received by the receiving party at the time the contract was signed.
China’s Cryptocurrency Stance: A Conflicting Landscape
This recent development highlights China’s changing position on digital assets and could have important consequences for people who invest in cryptocurrencies.
Despite China’s ban on cryptocurrencies, there has been a notable increase in investor interest in recent months. This interest was highlighted in a report from late 2022, which indicated that China was among the top ten countries in terms of global crypto adoption.
In an interesting development reported by Finbold in September 2022, the Beijing Number One Intermediate People’s Court ruled that citizens in China can continue to trade cryptocurrencies despite the ban. However, there is a condition attached to it – the court specified that interested investors could only consider cryptocurrencies as virtual assets and not use them as a form of currency.
Hence, it remains uncertain whether the recent guidelines from the Supreme Court signify the government’s acknowledgment of the legal status of cryptocurrencies.
Despite the uncertainty, China appears to be recognizing the increasing interest in digital assets. As reported by Finbold earlier, the country introduced a 20% personal income tax on investment gains for individual investors in cryptocurrencies and Bitcoin (BTC) miners.
