Shanghai Court Recognises The Legality Of Crypto Ownership For Individuals – Fin Tech
KEY TAKEAWAYS
- Shanghai court recognises cryptocurrencies as legal property,
allowing individuals to hold, buy, and sell digital assets like
Bitcoin. - Crypto-related business activities like token issuance,
trading, and initial coin offerings remain prohibited in
China. - The ruling raises the question of whether this could signal a
global shift towards broader acceptance of cryptocurrencies,
especially in light of Donald Trump’s potential impact on
crypto regulation in the United
INTRODUCTION: CRYPTO LEGITIMISED AS PROPERTY
In a recent opinion published on the Shanghai High Court’s
official WeChat account, Judge Sun Jie (“Judge
Jie“), a judge at the Shanghai Songjiang District
People’s Court (the “Court“),
confirmed that it is not illegal for individuals in China to hold,
buy, or sell cryptocurrencies, recognising them as legal
property.1 This statement marks a significant
development in clarifying the legal status of cryptocurrencies in
China. While the ruling reinforces the crackdown on crypto-related
business activities, such as token issuance and trading, it
provides legal certainty and reassurance for individual crypto
holders.
In a recentarticlepublished by TLP Advisors, we discussed
how Donald Trump’s victory in the United States presidential
election could potentially bring far-reaching and unexpected
effects on the global crypto landscape.2 Against this
backdrop, the Court’s ruling raises an important question: is
this a small step toward a broader global shift in crypto
acceptance? Could this ruling, alongside similar developments,
signal a growing recognition of cryptocurrencies as a legitimate
asset class across major jurisdictions?
IMPLICATIONS FOR INDIVIDUALS: LEGAL PROTECTION BUT LIMITED
FREEDOM
Recognition of Crypto as Property
The Court’s acknowledgement that cryptocurrencies possess
the attributes of property signals a positive development for
crypto enthusiasts. This classification ensures that individual
ownership of digital assets like Bitcoin is protected under Chinese
property laws,3 allowing citizens to legally hold and
transfer these assets without fear of confiscation or legal
penalties. However, this protection applies to ownership, not to
unrestricted trading or investment in virtual currencies.
Business Restrictions Remain Intact
While individuals now appear to have legal clarity regarding
ownership, businesses remain prohibited from engaging in
crypto-related activities such as token issuance, operating trading
platforms, and conducting initial coin offerings. The opinion
emphasised that such commercial activities violate financial
regulations, disrupt economic stability, and threaten public order.
As a result, these activities are not merely regulated but are
classified as illegal financial conduct under Chinese
law.4
FUTURE OUTLOOK: WILL CHINA OPEN UP TO CRYPTO?
China’s recognition of cryptocurrencies as legal property is
an important yet cautious step. Although this decision does not
ease the country’s strict regulations on crypto businesses, it
signals the possibility of gradual changes in the future. If global
markets, such as theUnited States,continue integrating digital
assets, China may face increasing pressure to rethink its current
stance to stay competitive in the evolving digital economy.
Nevertheless, this aligns with other jurisdictions that have
chosen to recognise cryptocurrencies as property, as seen in court
decisions in Singapore5 and theUnited Arab
Emirates(“UAE“).6
COMPARISON: CHINA VS UAE – TWO CONTRASTING APPROACHES TO
CRYPTO
China: Cautious Recognition with Strict Controls
Despite these developments, the country’s strict stance on
crypto-related business activities remains unchanged. China focuses
on controlling the broader crypto ecosystem to avoid financial
market instability, citing concerns over illegal fundraising, money
laundering, and fraud.
The government emphasises maintaining regulatory control,
preventing speculative trading, and minimising using
cryptocurrencies for illicit activities. While the individual
market may have some freedom, the commercial space remains tightly
regulated, making it difficult for businesses to thrive in the
crypto sector within China’s borders.
UAE: Proactive Regulation and Innovation
In contrast, the UAE has emerged as a global leader in creating
a comprehensiveregulatory framework for
cryptocurrencies.7 Through entities like the Virtual
Assets Regulatory Authority and the Abu Dhabi Global Market, the
UAE not only acknowledges the legitimacy of cryptocurrencies but
also offers a structured environment for businesses to operate,
fostering innovation and attracting international players. By
regulating exchanges, token issuances, and digital asset service
providers, the UAE ensures investor protection while promoting the
growth of the crypto sector.
This open and forward-thinking approach positions the UAE as a
dynamic hub for crypto innovation, supporting many global firms
looking for a stable and progressive regulatory landscape. The
country has embraced the digital asset industry as part of its
broader ambition to become a global leader in finance and
technology, creating a favourable environment for growth and
development.
CONCLUSION: A CAUTIOUS VICTORY FOR CRYPTO HOLDERS
China’s cautious approach to crypto recognition, while a
positive move for individuals, limits the potential for growth in
the crypto market. Its stringent controls on business activities
continue to stifle innovation and prevent domestic players from
fully engaging in the global crypto economy.
As the global crypto landscape evolves, the question remains
whether China will eventually reconsider its restrictive policies.
For now, crypto holders in China can take solace in knowing that
their digital assets are protected under the law, even as the
country maintains its cautious approach to the industry.
Footnotes
1 Judge Sun Jie, “Issuing virtual currencies to
raise huge amounts of funds, what is the end?,”Shanghai
High Court(18 November 2024),
https://mp.weixin.qq.com/s?__biz=MzA3MjcxNDM5OQ==&mid=2650784656&idx=1&sn=12cb5b68872ef0e5a8135b9709b5c356&scene=21&poc_token=HFuASWejhg3VwZj-agDyz1lnsv2TFR4cWJfRdZ5O.
2 Soham Jethani, et. al., “Trumping the Crypto
Landscape: Could a Second Term Reshape the Future of Crypto in the
US?,”TLP Advisors(7 November 2024),
https://techlawpolicy.com/2024/11/trumping-the-crypto-scene-could-a-second-term-reshape-the-future-of-crypto-in-the-us/.
3 ZeMing M. Gao, “Digital Assets Are Subject to
Property Laws”,CoinGeek(8 August 2022),
https://coingeek.com/digital-assets-are-subject-to-property-laws/.
4 Francis Shin, “What’s behind China’s
cryptocurrency ban?,”World Economic Forum(31 January
2022),
https://www.weforum.org/stories/2022/01/what-s-behind-china-s-cryptocurrency-ban/
5 Wahid Pessarlay, “Singapore High Court Deems
Digital Assets as Trustable Property,”CoinGeek(2
August 2023),
https://coingeek.com/singapore-high-court-deems-digital-assets-as-trustable-property/
6 Soham Jethani, et. al., “Dubai Court Embraces
Crypto: Employment Salaries may now be Payable in
Cryptocurrencies”,TLP Advisors(24 August 2024),
https://techlawpolicy.com/2024/08/dubai-court-embraces-crypto-employment-salaries-may-now-be-payable-in-cryptocurrencies/.
7 Soham Jethani and Pankhuri Malhotra, “UAE: A
Crypto Asset Hub,”TLP Advisors(01 January 2023),
https://techlawpolicy.com/2023/01/uae-a-crypto-asset-hub/.
Originally published 29 November 2024.
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