Earlier this week, the Chinese Supreme Court convened a high-level meeting to address the legal status of cryptocurrencies and the judiciary’s approach to cases involving digital assets. This gathering, attended by leading judicial authorities and legal scholars, underscores a renewed commitment to clarifying China’s enforcement of its crypto ban amid evolving legal challenges.
On February 23, representatives from the Supreme People’s Court met with various legal bodies to review recent research on cryptocurrency disputes. Participants examined both criminal and civil cases associated with digital assets and discussed potential enforcement strategies.
A pivotal legal opinion issued by a Shanghai court in November 2024 confirmed that personal ownership of cryptocurrencies is not illegal, even as the head of China’s digital currency initiative faces bribery allegations.
A article published on the Shanghai High People’s Court’s official WeChat account in November 2024, Judge Sun Jie addressed a lawsuit involving two companies in a dispute over an initial coin offering (ICO), which is considered illegal in China. Sun’s commentary clarified that while commercial crypto activities remain prohibited—including trading and token issuance—individuals are permitted to hold digital currencies like Bitcoin.
This ruling provides important legal guidance for crypto holders in China, an area previously marked by uncertainty due to strict governmental policies. Despite the clear legal framework banning commercial cryptocurrency activities, the judge emphasized that cryptocurrencies, as virtual commodities, are considered property and can be legally owned. However, this ownership does not extend to activities that could threaten financial stability or facilitate illegal conduct.
This legal opinion arrives during a resurgence in Bitcoin prices igniting speculation regarding the future of the crypto industry in China. According to a report from August 2023, Binance users in China traded cryptocurrency assets worth $90 billion in a single month, despite the illegality of such trading activities since 2021. Prior to 2017, China dominated the global cryptocurrency market, accounting for 80% of Bitcoin transactions conducted in yuan.
Despite the government’s crackdown on cryptocurrency and the current bear market, China’s blockchain industry remains robust, boasting the highest number of blockchain projects globally. Over 5,000 firms have registered with “blockchain” in their name, a significant increase from just 500 in 2017.
The global cryptocurrency market has faced significant losses, with a total market capitalization decline of $706 billion since its peak in early January 2018. Bitcoin prices plummeted from nearly $20,000 in January 2017 to approximately $3,500 by December 2018. The Central Bank of China reported that its ban on domestic cryptocurrency trading effectively reduced crypto-trade activity involving yuan to just 1%.
Despite the prohibition on domestic cryptocurrency trading and ICOs, companies like Binance, Huobi, and OKcoin remain significant players in the industry. Additionally, Bitmain Technologies, a Chinese firm, is the world’s leading manufacturer of cryptocurrency mining rigs, supplying 75% of the necessary equipment.
Experts attribute the government’s clampdown on cryptocurrencies to concerns about the lack of centralized regulation, the volatility of crypto prices, and the anonymous nature of transactions. Since 2013, the Chinese government has issued regulations aimed at restricting cryptocurrency trading to improve investor protection and mitigate financial risks.
Shogun Lin
