The Shenzhen International Court of Arbitration in China has ruled that Bitcoin is property, in a case where USD 400,000 of Bitcoin, Bitcoin Cash, and Bitcoin Diamond was not paid back despite a contractual agreement.
In the case review, the court first states that the legal attributes of Bitcoin in China are not legally defined but then decides that Bitcoin is property and protected by Chinese property laws. Key findings by the court, in this case, are that:
“Under the current legal system, the arbitral tribunal affirmed the property attributes of Bitcoin in accordance with the provisions of the General Principles of the Civil Law, the “Contract Law” and the contractual agreement, and the principle of good faith and the arbitration concept of respecting party autonomy… Chinese laws and regulations do not prohibit privately held and legally transferred bitcoin… although Bitcoin exists in the virtual space of the network, it has special characteristics in terms of possession and publicity of rights change, but it does not prevent it from becoming an object of delivery.”
A very important point is that despite Bitcoin not being legal currency, it still is protected under Chinese law:
“Bitcoin is not a legal currency and does not prevent it from being protected by law as a property. Bitcoin has property attributes that can be dominated and controlled by manpower, have economic value, and can bring economic benefits to the parties. This is the meaning of the parties’ agreement and does not violate the legal provisions. The arbitral tribunal recognizes this.”
This ruling from the court means that Chinese citizens can hold Bitcoin, mine it, transact it and make contracts that involve it. Up until now, the regulations in China regarding the world’s most used cryptocurrency have been getting progressively worse, with Bitcoin to fiat trading in China banned during 2017, causing the biggest crypto exchanges in the world to flee the country. Further, initial coin offerings (ICOs) have been banned in China, and most offshore crypto exchange websites have been blacklisted.
A critical aspect of this court ruling is that Bitcoin miners in China can hold and transact their Bitcoin as property, and for the time being do not have to worry that they are breaking the law. This is good for the health of the Bitcoin network, since 74% of all mining hash power is located in China. Perhaps this court ruling will help increase China’s share of the mining hash rate even further.
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