Chinese Court Says Crypto is ‘Not Protected By Law’
In a landmark ruling that could shake China’s crypto scene, the Supreme Court of the Shandong province has ruled that cryptocurrency “was not protected by law” after deliberating on a case that involves a potential fraud related to the purchase of tokens, as reported by The South China Morning Post.
A Chinese plaintiff invested some RMB 70,000 (USD 10,800) to buy tokens endorsed by three of his acquaintances in 2017. Their accounts were allegedly closed after the People’s Bank of China, the country’s central bank, banned financial institutions and payment businesses from providing services related to crypto transactions, said the article.
The latest decision follows a lower instance ruling from January 2021 in which a court in Jinan said that the plaintiff’s allegations of fraud were not justified, as the assets in question did not benefit from any legal protection. The ruling was upheld two months later, following which it was submitted to the province’s high court.
Per the report, Shandong’s Supreme Court said in a statement that “investing or trading cryptocurrency is not protected by law” in what could become another major blow to China’s crypto industry.
The Chinese authorities have demonstrated an increasingly firm stance on crypto. While bitcoin (BTC) ownership has remained legal in China despite a massive crackdown that took place in September 2017, which banished crypto exchanges and outlawed initial coin offerings (ICOs), over the past months the government has become increasingly keen to stamp out crypto-related fraud and clamp down on crypto mining. This has lead to reports of miners relocating overseas.
Last July, the Agricultural Bank of China (ABC), one of the country’s biggest commercial banks, announced its willingness to crack down on crypto transactions, and seek to block accounts connected with bitcoin- and crypto-related activity.
Shandong has a population of more than 100m, and it is ranked as China’s third most developed province, with a gross domestic product (GDP) of RMB 7.31trn (USD 1.13trn) in 2020.