A high court in China is saying Bitcoin is protected by law and has economic value

• The court said that Bitcoin has economic value, while hearing a dispute between two individuals.
• The High People’s Court is the highest court in a Chinese province.
• China has banned all crypto transactions and mining within its borders in 2021.

A new ruling from the Shanghai High People’s Court in China has given a new spin to the country’s tryst with cryptocurrencies. While China’s ouster of crypto miners within its borders, and various other rulings had more or less banned crypto trading and related activities in the country, the Shanghai ruling might come as a point of respite for the community.

The ruling in question declared Bitcoin as a virtual asset that is protected by Chinese law, and has economic value. “In the actual trial practice, the People’s Court has formed a unified opinion on the legal position of bitcoin, and identified it as a virtual property,” it said on its official WeChat channel.

A high people’s court in China is the highest local court in Chinese provinces, preceded by the people’s courts and intermediate people’s courts. They are controlled directly by the central government and have a similar structure to the Supreme People’s Court, which lies above them. The Supreme People’s Court is the highest court in Chinese states.

The fight over one bitcoin

The High People’s Court was hearing a case filed by a person called Cheng Mou, another Shi Moumou, to return his (one) bitcoin. The case originally began at the Shanghai Baoshan District People’s Court on October 10, 2020, and Moumou was directed to return the bitcoin.

However, the defendant refused to do so and the case moved up to the Shanghai High People’s Court.

While the case is still in lower courts in the country, the ruling could be significant, since it sets a precedent for how virtual assets are being seen in Chinese law. So far, the government has discouraged the trading of cryptocurrencies, and shunned miners in order to reduce energy consumption and discourage the industry as a whole.

"Virtual currency-related business activities are illegal financial activities," the People's Bank of China said in September last year. It also warned Chinese citizens that crypto trading could "seriously endanger the safety of people's assets".

However, if the same assets have real economic value, then the bank’s rulings could be brought into question by businesses that want to revive crypto-related activities in the country.

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