China's Shanghai High Court Declares Bitcoin Enjoys Property Rights Protections as "Virtual Property"

The Shanghai High Court has reportedly declared that Bitcoin qualifies as a virtual asset that enjoys property rights protections under Chinese law, despite a ban on crypto in the country.

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According to local reports, the statement follows a lawsuit filed in October 2020, where a lower court ordered the defendant to return one Bitcoin to the plaintiff within ten days. The defendant failed to do so, prompting the plaintiff to seek further advice from the local courts, which proceeded to issue an enforcement notice in the case demanding to return of the Bitcoin.

In May last year, the parties agreed to a compensation sum of CNY 84,000 (USD 12,500), amid findings that the defendent no longer held Bitcoin.

"In judicial practice, the courts are based on judicial pragmatism and do not directly judge the legal nature of virtual property," the Court said on its official WeChat account last week. "Because it has a certain economic value and conforms to the property's attributes, the legal rules of property rights are applied for protection."

In the case analysis, it was pointed out that multiple previous judgments from the people’s court have formed a unified opinion identifying Bitcoin as virtual property.

Chinese regulators began trying to stamp out cryptocurrency activities in the country since 2017, banning ICOs as well as domestic crypto exchanges. In May 2021, industry bodies issued a notice calling for a complete ban on financial institutions and payment companies providing cryptocurrency services to customers, including the acceptance of cryptocurrency as payment.

A month later, the PBOC (People's Bank of China) instructed major financial institutions to stop facilitating cryptocurrency transactions, while several provincial authorities ordered a stop to all cryptocurrency mining activities. Then in September 2021, the PBOC and nine other government agencies issued a notice declaring all virtual currency-related business activities illegal and vowing to crack down on the market.

Earlier this year, Chinese regulators declared cryptocurrency mining an obsolete industry, and China's Supreme People's Court issued a legal interpretation criminalising crypto fundraising.