tl;dr
Digital asset ownership is deemed legal for individuals in China, according to a Shanghai judge. However, businesses are prohibited from investing in digital assets or issuing tokens without restrictions. The judge emphasized that while holding digital assets is not illegal, businesses engaging in s...
Digital Asset Ownership Legal in China: Shanghai Judge Owning digital assets is not illegal for individuals under Chinese law, a Shanghai judge has ruled. However, enterprises are prohibited from investing in digital assets or issuing tokens “at will,” the judge added.
According to Judge Sun Jie at Shanghai’s Songjiang People’s Court, it is not “illegal for individuals to hold cryptocurrency.” However, businesses can’t invest in digital assets or issue tokens “at will” either. Jie further stated that Chinese law considers digital assets to be virtual commodities to which property attributes are assigned.
However, the law bars businesses from engaging in digital asset investment as it can disrupt the country’s economy or provide an avenue for financial crime. Judge Sie emphasized that virtual currency trading speculation activities such as BTC may disrupt the economic and financial order, breeding money laundering, illegal fund-raising, fraud, pyramid schemes, and other illegal and criminal activities.
While it may not be illegal to hold digital assets, the judge warned the public against ‘crypto,’ reminding investors that the law may not be able to protect them in certain instances if they lose their money.
The ruling was in a case involving two companies that were fighting over a breach of contract in a token issuance agreement. Since the law considers token issuance illegal, the judge ruled that all payments made between the two parties must be refunded. This ruling adds a new layer to China's complex stance on digital assets, despite previous bans and restrictions.
Chinese government had previously banned digital assets and outlawed initial coin offerings (ICOs) and block reward mining, but Chinese courts have made rulings implying that owning digital assets wasn’t illegal.