Possession of Bitcoin still legal in China despite ban, lawyer says
Despite enforcing a major ban on cryptocurrency a year ago, the Chinese government still protects local crypto investors as crypto is recognized as virtual property protected by law.
One of the world’s most hostile countries to Bitcoin (BTC), China has yet to ban possession of cryptocurrencies, according to David Lesperance, founder of Lesperance & Associates law firm.
Crypto holders in China are protected by law in the event of theft, embezzlement or breach of a loan agreement, Lesperance told Cointelegraph. He emphasized that crypto exchanges are still banned in China.
The lawyer referred to a recent Chinese court case involving the breach of a loan given in the Litecoin (LTC) cryptocurrency. Defendant Ding Hao failed to repay all 50,000 LTC that he borrowed from Zhai Wenjie in 2015, which became a major court precedent involving cryptocurrency in China.
Since 2015, the price of Litecoin has jumped roughly 1,800%, as the cryptocurrency traded for around $3 seven years ago, according to data from CoinGecko.
On August 31, Beijing No. 1 Intermediate Court 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 confirmed that cryptocurrencies like Litecoin are ‘property’ even if they are created in the virtual realm,” Lesperance said. He stressed that the crypto community “shouldn’t draw any particular positive conclusions” from the case, as it was a “very ordinary” commercial loan dispute that was decided under ordinary property law rules, saying:
“To date, possession of crypto in China has not been banned. […] It does not make commercial trading of this type of property legal, as the government has specifically banned crypto exchanges in China.”
While Lesperance says that crypto exchanges are banned in China, some local crypto enthusiasts are confident that the PBoC has never explicitly banned individuals from trading cryptocurrencies.
“It is true that China does not want individuals to trade crypto. But this is never written in any formal document,” a person connected to the crypto industry in China told Cointelegraph.
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According to the source, many mainland users are seeing their bank cards frozen if they use them for crypto over-the-counter (OTC) transactions. However, trusted OTC channels still allow crypto transactions in China.
“So while trading crypto is not illegal, we don’t want to waste our time arguing with banks because they obviously think everything about crypto is illegal,” the person said.
The latest news brings yet another proof that crypto has not been fully suppressed in China since the government announced a coordinated crackdown on crypto in September 2021. As previously reported, China returned its position as the second largest Bitcoin hash rate provider as of January 2022.
