Chinese Court Orders To Protect Bitcoins Under Property Laws
The Court of International Arbitration in the Chinese city of Shenzhen recognized the economic value of bitcoin and suggested protecting cryptocurrency as a property, cnLedger reports.
Beyond that the court admitted that China’s legislation does not prohibit the possession and transfer of bitcoins. At the same time, the local central bank has banned crypto trading.
The court considered the case of two Chinese businessmen, who concluded a contract on transferring digital assets. According to the document, the defendant avoided paying the specified sum of about $493 thousand, which consisted of 20 bitcoins, 50 Bitcoin Cash tokens, and 13 Bitcoin Diamond.
The respondent justified his decision on the ground that the central bank prohibited the digital asset trading, so the contract was invalid. However, the arbitration commission disagreed with his arguments, since the contract was the obligation for assets transfer, and it did not fall under the crypto trading ban.
In 2017, major Chinese crypto exchanges ceased their operation due to the strict regulatory policy towards crypto trading. Nevertheless, the court ordered that this does not exempt the defendant from paying the digital currencies under the contract.
As the court clarified, there are no specific laws regulating the crypto sphere in China. It means that the possession of bitcoins and their transfer between individuals is not formally prohibited.
The ruling also states that these assets have economic value and should be considered as the property. Regardless of whether bitcoin is a legal tender, the state should ensure its protection under the law, as well as guarantee corresponding rights to the holders.
Earlier, the Chinese authorities introduced a draft law on blockchain startups.