Despite enforcing a major cryptocurrency ban a year ago, the Chinese government continues to protect local crypto investors as cryptocurrencies are recognized as virtual property protected by law.
One of the most hostile countries in the world towards Bitcoin (BTC), China has not yet banned the possession of cryptocurrencies, according to David Lesperance, founder of law firm Lesperance & Associates.
Cryptocurrency holders in China are protected by law in case of theft, misappropriation or breach of a loan agreementLesperance told Cointelegraph. She stressed that crypto exchanges are still banned in China.
The lawyer referred to a recent Chinese court case related to the default of a loan made in the cryptocurrency Litecoin (LTC). Defendant Ding Hao failed to fully repay the 50,000 LTC loaned to him by Zhai Wenjie in 2015, which became a major court precedent related to cryptocurrency in China.
Since 2015, Litecoin’s price has shot up roughly 1,800%, since the cryptocurrency was trading at about $3 seven years ago, according to data from CoinGecko.
On August 31, Beijing 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) officially banned crypto transactions last year.
“The court has held that cryptocurrencies like Litecoin are ‘proprietary’ even though they are created in the virtual realm,” Lesperance said. She stressed that the cryptocurrency community “should not draw any particular positive conclusion” from the case, as it was a “very ordinary” business loan dispute that was settled under normal property law rules, stating:
“To date, the possession of cryptocurrencies in China has not been prohibited. […] It does not make trading of these types of goods legal, as the government has specifically banned cryptocurrency exchanges in China.”
Although Lesperance says that cryptocurrency exchanges are prohibited in China, some local crypto enthusiasts are confident that the PBoC has never explicitly prohibited individuals from trading cryptocurrencies.
“It is true that China does not want individuals to trade cryptocurrencies. But this has never been written in any formal document”a person linked to the cryptocurrency industry in China told Cointelegraph.
According to the source, many mainland Chinese users see their bank cards frozen if they use them for over-the-counter (OTC) cryptocurrency transactions. However, trusted OTC channels still allow crypto transactions in China.
“So even though trading crypto isn’t illegal, we don’t want to waste our time arguing with the banks because obviously they think anything related to crypto is illegal,” the person said.
The latest news brings yet another piece of evidence that cryptocurrencies have not been totally suppressed in China since the government announced a coordinated crackdown on them in September 2021. As previously reported, China regained its position as the second largest rate provider. of Bitcoin hashes as of January 2022.
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