Chinese Supreme Court Sets Rules for Crypto Disputes
Even though cryptocurrencies are officially illegal in China now, the local system still has a way to handle legal disputes that come up because of them.
Since September 2021, China has made it illegal to buy or sell cryptocurrencies and has severely limited the mining of cryptocurrencies.
But the ban has turned out to be more of a general rule than anything else. Since it started, Chinese leaders have talked about how to tax crypto. Also, a 2022 court case made it clear that locals aren’t allowed to use crypto as money, but they can still own it as an investment object.
As an asset, it can be taxed, which means that Chinese courts will have to think more about how to handle cases that involve cryptocurrency.
Crypto Can Resolve Debts
In a statement made by members of the Chinese Supreme Court, policymakers said that debts can be paid off with cryptocurrency up to an undisclosed amount, as long as there is a legal contract in place that calls for payment in cryptocurrency and no other local laws take priority.
But it’s said again that the cryptocurrencies that were used to pay off the debt are not legal currency. If the above contracts say that, Chinese judges are supposed to throw them out.
“Where a party uses virtual currency as a regular payment instrument to exchange legal tender or physical commodities under the guise of a basic transaction contract, the people’s court shall determine that the contract is invalid.”
In Some Cases, Crypto Platforms
Before completely banning crypto trading in 2021, the Chinese government warned its people many times about the risks of dealing in these assets. Even though people thought those threats were too harsh at the time, what happened in 2022 has shown that they were not completely wrong.
According to the law draft that was talked about, the Chinese government will not stand up for Chinese people in court who lost their assets during the crypto winter.
But Chinese people who traded crypto before September 4, 2017, when a legal document called “Notice on Preventing the Financing Risks of Token Issuance” came out, and lost their assets because trading platforms didn’t meet their contractual obligations, will be able to go to court to get justice.
The document also says how Chinese courts should handle disputes where criminal behavior is suspected or where crypto mining is involved. Even though crypto trading is legally illegal in China, the country has changed its mind about digital assets many times in the past, so it’s possible that the ban will be lifted at some point in the future.
