In China, Bitcoin Payments Are Legal After All
Mainland China’s blanket ban on cryptocurrencies does not apply to merchants who accept and store digital assets such as bitcoin, according to recent report by cnLedger, a local blockchain news outlet. The report sheds some positive light on a region of the world that once dominated the cryptocurrency market.
Bitcoin Payments Not Illegal
Court documents obtained by cnLedger confirm that ownership of bitcoin is legal in China. According to the Shenzhen Court of International Arbitration, bitcoin and other digital assets are recognized as property, which allows individuals and merchants to store and pay with them without breaking any laws.
In a tweet that appeared on Oct. 25, cnLedger reported:
“Chinese court confirms Bitcoin is protected by law. Shenzhen Court of International Arbitration ruled a case involving cryptos. Inside the verdict: CN law does not forbid owning & transferring bitcoin, which should be protected by law because of its property nature and economic value.”
According to cryptocurrency researcher Katherine Wu, digital assets such as bitcoin are currently protected under China’s property and contract law. She explains that, “Because the various legal definitions for crypto under current Chinese laws and regulation are unclear, the arbitrator relied on existing contract law and general provisions of the civil law to determine the contract that is at dispute here.”
China and the Future of Crypto
The Chinese government issued multiple crackdowns on the blockchain market in September 2017, including blanket bans on cryptocurrency trading and initial coin offerings. Efforts to clamp down on illicit crypto trading are ongoing, with central authorities blocking access to foreign exchange services. Earlier this year, authorities targeted 124 offshore cryptocurrency exchanges that were still providing services to domestic traders.
Paradoxically, the Chinese government is researching new use cases for blockchain and cryptocurrency. As Hacked reported back in June, a research lab created by the People’s Bank of China has already submitted 41 cryptocurrency patents. This is a strong sign that regulators will one day embrace the blockchain economy, albeit on their terms and conditions.
China is also home to some of the world’s largest mining manufacturers that serve as key cogs in the global blockchain economy Three firms in particular – Bitmain, Ebang and Canaan Creative – have announced plans to issue public offerings in Hong Kong.
Domestic restrictions have not deterred crypto enthusiasts from finding novel ways to access the market. Investors from mainland China appear to be flocking to Singapore and other blockchain-friendly jurisdictions to set up foundations that invest solely in cryptocurrencies and other blockchain projects. According to local sources, Singapore is home to hundreds, if not thousands, of Chinese token investment funds. Creating such an entity costs only 10,000 RMB ($1,440) and takes just 15 days.
Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.
Featured image courtesy of Shutterstock.