How much is the legal value of a bitcoin in China, where most crypto transactions are illegal?
There is no general cryptocurrency law in China yet, but there are some regulations issued by banking authorities.
Legal experts have long argued over whether such cryptocurrencies should be considered property, while local Chinese courts in various areas have ruled differently over the years.
“Cryptocurrency is relatively new to China, as are the regulations related to it,” said Jason Yao, a retired lawyer from Shanghai.
“There have been many such cases in recent years, whether in criminal or civil courts, and we can see from the different rulings that some judges see it as meeting the definition of virtual property, while others see it as data because it doesn’t may be legally traded in China, therefore they are worthless,” Yao said.
For example, several local courts in China have ruled that cryptocurrency transactions do not take place under the protection of proprietary laws.
“It’s not just China,” Yao added. “In fact, almost every country in the world is at the beginning of crypto regulations.”
A new law was passed in Germany last summer so that institutional crypto investors can officially invest in cryptocurrencies.
In the US, such transactions are governed by various regulations. Many say a recent high-profile case in early February tested the limits of the US in tracking cybercrime.
A New York couple indicted on suspicion of stealing $3.6 billion in bitcoin was labeled by the media as the “Bonnie and Clyde” of cryptocurrency or having engineered the “Heist of the century.” They were charged with conspiracy to commit money laundering and conspiracy to defraud the United States.
A recent ruling from Beijing and a document from Shanghai may shed light on where future relevant laws in China could lead.
In the Beijing case, two young men who stole 50 million yuan ($7.3 million) worth of Bitcoin, Ethereum and Tether coins were sentenced to 12 years for theft by the Beijing Chaoyang District People’s Court.
In 2019, one of the defendants, a 30-year-old man whose education stopped after elementary school and was unemployed at the time, searched online for hacking methods in hopes of making some money.
He shared the investigation with his co-defendant and the two began hacking into a Beijing-registered information company that maintains an offshore cryptocurrency trading platform.
They stole 620,000 Tether coins, almost 12,688 Ethereum coins, and almost 150 Bitcoins in less than three hours. The company had to pay 50.26 million yuan in compensation to the platform, based on trading prices at the time.
The couple was charged with theft, and the defendant’s lawyer argued that the virtual currencies in the case should not be considered property, as the relevant trading platform was offshore, violated Chinese regulations, and should not be protected by law.
Therefore, the defendants should be charged with damaging computer systems rather than theft, the argument went.
The Chaoyang court ruled that the three cryptocurrencies should not be considered currency under Chinese regulations, but could still be considered property. According to the court, there is no law or regulation in China that prohibits the ownership and transfer of bitcoins.
But it could not be valued at 50 million yuan, and instead the defendants were sentenced to 12 years in jail based on the two million yuan they were able to sell and get in cash.
Furthermore, the Shanghai Higher People’s Court issued a document on their WeChat account stating that Bitcoin is subject to proprietary rights laws and regulations. His decision was related to a lawsuit filed in 2020 in the Baoshan District Court involving the recovery of a 1 bitcoin loan.
The lower court recognized that Bitcoin has value, scarcity, and availability, making it subject to property rights and meeting the definition of virtual property.
Through mediation, the relevant parties agreed that the defendant would provide compensation at a discounted value of the bargain price at the time of the loan.