Shanghai Court Clarifies Cryptocurrency Ownership Rights Amid Digital Currency Scandal

A legal opinion issued by a Shanghai court has clarified a critical question regarding the status of cryptocurrencies in China, confirming that personal ownership of digital assets such as Bitcoin is not illegal. This development comes against the backdrop of allegations of corruption against a leading figure in China’s digital currency initiatives and a broader surge in cryptocurrency prices.

The legal opinion was detailed in an article published this week on the Shanghai High People’s Court’s official WeChat account. Sun Jie, a judge at the Shanghai Songjiang People’s Court, examined a lawsuit involving disputes between two companies over an initial coin offering (ICO), a form of fundraising banned in China. Sun’s analysis reinforced that while commercial activities involving cryptocurrencies—such as trading, mining, and investment—are prohibited, individuals may legally hold cryptocurrencies as personal assets.

This clarification provides important legal guidance in a country where the status of cryptocurrencies has long been ambiguous due to the government’s stringent policies. While emphasizing the prohibition of business-related crypto operations that could destabilize financial systems or facilitate illegal activities, Sun’s opinion confirmed that cryptocurrencies possess attributes of property and can legally be owned by individuals.

The opinion comes at a time of renewed interest in Bitcoin, with the cryptocurrency recently reaching a record-breaking price of $98,000. The ruling may hold significant implications for the industry, as reports from August 2023 indicate that Binance users in China traded cryptocurrency-related assets worth $90 billion in a single month, despite such activities being illegal since 2021.

At the same time, a bribery scandal involving a prominent figure in China’s digital currency ecosystem has shaken the industry. Yao Qian, the former head of the Science and Technology Supervision Department at the China Securities Regulatory Commission (CSRC) and the People’s Bank of China’s (PBoC) digital currency research institute, is facing accusations of using cryptocurrencies to facilitate bribery.

Yao, once celebrated for his contributions to the development of China’s digital currency, has been expelled from the Communist Party and removed from public office following an investigation by the Central Commission for Discipline Inspection (CCDI) and the National Supervisory Commission. The charges against Yao include abusing his position for personal gain and engaging in improper dealings with technology providers.

China has historically adopted a strict stance against cryptocurrency activities. The PBoC banned ICOs in 2017 and declared all crypto-related commercial operations illegal by 2021, curbing the sector’s development in mainland China. Nevertheless, Chinese courts have previously ruled that cryptocurrencies should be treated as property, providing some protections to individual holders.

Amid these developments, experts continue to debate the role of cryptocurrencies in China’s economy. Former Vice Finance Minister Zhu Guangyao has advocated for integrating cryptocurrencies into the nation’s digital economy. Calls for a more open regulatory framework persist as global interest in cryptocurrencies grows, fueled by Bitcoin’s recent price surge and developments in markets like the United States.

In the U.S., President-elect Donald Trump has proposed establishing a national Bitcoin reserve and implementing crypto-friendly policies, placing additional pressure on China to reconsider its stringent regulatory approach.

Hong Kong, meanwhile, is positioning itself as a potential middle ground in the global cryptocurrency debate. On November 15, Hong Kong Exchanges and Clearing (HKEX) launched a virtual asset index series, part of the region’s effort to strengthen its reputation as a crypto hub. The index, based on the 24-hour spot trading volume of Bitcoin and Ethereum, marks the latest step in Hong Kong’s push to embrace virtual currencies.

The Hong Kong government has actively supported virtual asset development in recent years. In June 2023, the Securities and Futures Commission (SFC) allowed the listing of six virtual currency ETFs, a first for Asia. The introduction of the virtual asset index series aligns with the government’s emphasis on fintech development and offers investors more diverse opportunities.

As Bitcoin prices soar and global interest in cryptocurrencies grows, China’s mixed signals—between individual ownership rights and strict commercial prohibitions—leave the future of the crypto industry in the region uncertain. Meanwhile, Hong Kong’s progressive approach could position it as a critical player in bridging global enthusiasm for digital assets with China’s cautious policies.

By fLEXI tEAM