Chinese court recognises Bitcoin as digital currency

The Shanghai Second Intermediate People’s Court recognised the first cryptocurrency as a “unique and non-reproducible” digital asset, affirming its value under the law.

Judge Ren Suxian, in her report, outlined the key features of cryptocurrencies and highlighted the practical difficulties in interpreting such terms.

She recalled two similar cases involving the theft of USDT worth 12 million yuan (~$1.64 million) and bitcoin. In the first case the court classified the offence as theft of property, and in the second as illegal acquisition of computer information.

Judge Ren also named the main challenges in court cases involving digital assets:

• indeterminacy of the legal properties of cryptocurrencies;
• difficulties in tracing and handling;
• irreversibility and the anonymous nature of transactions.

The report notes that Bitcoin inherits key currency characteristics, including scalability, ease of circulation, storage and payment. At the same time, the coin continues to be used worldwide, despite its decentralised nature, the judge stressed.

‘Currently, digital currency in our country is not recognised as a means of payment; descriptions of its characteristics as a commodity and as a monetary unit vary, but it is not contraband, and its property attributes cannot be wholly denied,’ added Ren.

To avoid further confusion, the report proposes steps to modernise the judiciary. First, cases should be heard at two levels — “people” and “things.” This would make it easier to classify the key objects of the hearing.

Secondly, the government should establish a regime for coercive measures against cryptocurrencies, including a confiscation mechanism. Finally, Ren advised improving the system for identifying holders of digital assets.

Since 2017, trading bitcoin and other cryptocurrencies on local exchanges in China has been illegal. Later authorities only tightened control over industry participants.

Earlier in September 2023, the People’s Court of China recognised cryptocurrency as property. Under the ruling, virtual assets possess economic properties and can be classified as property under legal protection.