Key Takeaways
- Cryptocurrencies not backed by law says a Chinese court
- This latest verdict contrasts existing rulings on cryptocurrencies in the country
- China has increased nationwide crackdown on crypto activities
This latest development was revealed by local news outlet the South China Morning Post on Monday. According to the report, a high court located in the Shandong province issued a statement clarifying that the law does not protect cryptocurrency investment or trading.
The court issued this verdict following the review of a case where the plaintiff invested 70,000 yuan in 2017 on cryptocurrencies based on advice from friends. The plaintiff lost access to the accounts after the Chinese central bank (PBOC) banned crypto trading in 2018.
The plaintiff filed a fraud allegation suit, but the court ruled that his case was not tenable because the law does not back cryptocurrencies in China. This verdict contradicts other decisions made by several Chinese courts.
Last year, a court in Shanghai ruled that bitcoin was a digital asset by the law. In addition, an earlier verdict by a court in Guangdong province stated that Ethereum was a legal asset with economic value.
These contrasting rulings show the state of cryptocurrency regulations in the second-largest economy in the world. The Chinese government initially appeared to endorse some aspects of cryptocurrencies like mining but banned trading activities that could affect the stability of the Yuan.
However, this has changed in recent months with an increased crackdown on mining activities across the country. This has led to a drop in bitcoin hashrate and an increasing percent share of the hashrate taken by other countries.
The PBOC has also been testing the national digital currency called the digital Yuan. The digital Yuan is expected to be fully launched before the end of the year.
Do you think the law should back cryptocurrencies?
