A court in Shanghai has declared that bitcoin qualifies as a virtual asset enjoying the protection of Chinese law, despite the ban on cryptocurrency platforms and trading launched in China at the end of 2017.
On 5 May the Shanghai High Court’s official WeChat channel issued a statement concerning a bitcoin-related case, declaring that the cryptocurrency is a virtual asset.
“In the actual trial practice, people’s courts have formed the unanimous opinion concerning the legal position of bitcoin, and considers them to be virtual assets,” said the Court.
“Because [virtual assets] possess definite economic value and are assets in nature, for this reason asset rights laws and regulations are applicable to the implementation of protection.”
Shanghai courts previously declared that bitcoin is subject to legal protections given that it possesses value, is scarce and allocatable, and thus satisfies the criteria for being a virtual asset.
Liu Yang (刘扬) from DeHeng Law Offices said to state-owned media that the statement will have strong significance for civil disputes in the Shanghai area involving bitcoin.
The statement also marks the first time that a higher court in China has issued a ruling in relation to a bitcoin case.
The original case saw a Mr. Cheng file a lawsuit at the people’s court for Shanghai’s Baoshan district on 10 October 2020, demanding the return of one bitcoin by a Mr. Shi.
The court ruled on 23 February 2021 that Mr. Shi must repay Mr. Cheng his one bitcoin within 10 days of the judgement. Mr. Shi refused to make the payment however, prompting Mr. Cheng to seek further redress from the local court system.
In May the Baoshan court arranged for intermediation between the two parties, who agreed to a compensation sum of 84,000 yuan.