In the court's ruling: “According to real administrative regulations and cases, our country only denies the monetary attributes of virtual currency and prohibits its circulation as currency, but the virtual currency itself is a virtual property protected by the law.”
A Chinese court has ruled that its locals may continue to trade cryptocurrencies, notwithstanding the nation's ban on services related to digital assets.
Interestingly, China has banned cryptocurrency trading since 2013 and has repeatedly extended the ban since then, citing a risk to the stability of the financial system.
According to the Beijing Number One Intermediate People's Court, interested investors may only trade cryptocurrencies, which should be regarded as virtual assets rather than as a form of legal tender.
The decision was reached in a case involving a Litecoin (LTC) loan with the promise of receiving interest payments in digital currencies. According to the case specifics, Zhai Wenjie lent his friend Ding Hao 50,000 Litecoin in 2015. Zhai Wenjie claims Ding Hao promised to pay 1,000 Litecoin in interest each month, a claim the defendant refuted.
The presiding judge noted that Litecoin could not be treated as a currency and acknowledged the current Chinese ban on cryptocurrency trading. The court stated that the crypto is not backed by any legal or financial frameworks and is not issued by a monetary authority.
Surprisingly, the court took Litecoin into consideration despite the country's laws governing such assets and the current ban on Bitcoin (BTC).
The judge in the case cited the absence of laws prohibiting the perception of Litecoin as a legal asset. As a result, the judge ordered the defendant to return the Litecoin after finding that the complainant had provided evidence proving the defendant had borrowed the cryptocurrency.
The court ruled that:
“According to real administrative regulations and cases, our country only denies the monetary attributes of virtual currency and prohibits its circulation as currency, but the virtual currency itself is a virtual property protected by the law.”
It is important to note that various Chinese regional courts have delivered varying rulings regarding the handling and trading of digital assets. As reported by Finbold in May, for instance, the Shanghai High People’s Court ruled that Bitcoin has a ‘certain economic value’ and is protected by the country’s laws.
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