Despite a massive ban on cryptocurrency a year ago, the Chinese government is still protecting local crypto investors as the cryptocurrency is recognized as virtual property protected by law.
One of the world’s most hostile countries toward Bitcoin (BTC), China has yet to ban the possession of cryptocurrencies, according to David Lesperance, founder of legal firm Lesperance & Associates.
Lisperance told Cointelegraph that holders of cryptocurrency in China are protected by law in the event of theft, embezzlement, or breach of the loan agreement. He emphasized that cryptocurrency exchanges are still banned in China.
The lawyer referred to a recent Chinese court case regarding the breach of a loan made in the Litecoin (LTC) cryptocurrency. Defendant Ding Hao failed to fully repay every 50,000 LTC he borrowed from Zhai Wenjie in 2015, which became a major court precedent related to cryptocurrency in China.
Since 2015, Litecoin’s price has jumped nearly 1,800%, as the cryptocurrency traded around $3 seven years ago, according to data from CoinGecko.
On August 31, Beijing’s No. 1 Intermediate Court ruled that the defendant owed Zhai the remaining amount of Litecoin, rejecting Ding’s argument that the People’s Bank of China (PBoC) formally banned crypto transactions last year.
“The court upheld that cryptocurrencies like Litecoin are ‘proprietary’ even though they were created in the virtual world,” Lisbrance said. He stressed that the crypto community “should not draw any particular positive conclusions” from the case because it was a “very ordinary” business loan dispute that was settled under normal property law rules, noting:
So far, the possession of cryptocurrencies has not been banned in China. […] does not make commercial trading of this type of property legal, as the government has specifically banned cryptocurrency exchanges in China. ”
While Lesperance says cryptocurrency exchanges are banned in China, some local crypto enthusiasts are confident that the PBoC has never explicitly banned individuals from trading cryptocurrency.
“It is true that China does not want people to trade cryptocurrency. A person connected to the crypto industry in China told Cointelegraph that this is never written into any official document.
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According to the source, many mainland users are seeing their bank cards frozen if they use them for over-the-counter (OTC) crypto transactions. However, trusted OTC channels still allow crypto transactions in China.
This person said, “So even though cryptocurrency trading is illegal, we don’t want to waste our time arguing with banks because they clearly think everything about crypto is illegal.”
The latest news provides further evidence that crypto has not been completely suppressed in China since the government announced a coordinated crackdown on digital currencies in September 2021. As previously reported, China has repositioned itself as the second largest provider of Bitcoin hashrate as of January 2022.