Chinese court approves crypto trading, but not its use as a cash substitute
A Chinese court has ruled that citizens can still trade cryptocurrencies despite the country’s ban on digital asset services. In particular, China has an existing ban on cryptocurrency trading, citing a threat to financial sector stability.
The Beijing Number One Intermediate People’s Court ruled that interested investors can only trade cryptocurrencies, but should be treated as virtual assets and not function as a currency.
The ruling was handed down in a case involving a crypto loan in Litecoin (LTC) with a promise to pay interest in digital currencies. Case specifics indicate that in 2015 Zhai Wenjie loaned his friend Ding Hao 50,000 Litecoin. Zhai Wenjie stated that Ding Hao promised to pay 1,000 Litecoins as interest per month, a claim the defendant denied.
Litecoin currency status
Although the court recognized the existing Chinese ban on cryptocurrency trading, the presiding judge noted that Litecoin could not be treated as a currency. According to the court, the crypto is not issued by a monetary authority along with the lack of support from legal and financial frameworks.
“According to actual administrative regulations and cases, our country only denies the monetary properties of virtual currency and prohibits its circulation as currency, but the virtual currency itself is a virtual property protected by law,” the court ruled.
Interestingly, amid the existing ban on Bitcoin (BTC), the court considered Litecoin, noting that the country has laws regulating such assets.
In the case, the judge cited a lack of laws prohibiting the perception of Litecoin as an illegal asset. Therefore, the judge credited the complainant for proving that the defendant borrowed a cryptocurrency and ordered him to return the Litecoin.
China’s stance on cryptocurrencies
The ruling echoes a recent ruling by a court based in Chaoyang that ordered companies not to pay salaries in Tether (USDT) due to the ban on the circulation of digital assets.
It is worth noting that various Chinese regional courts have issued varied rulings on the trading and handling of digital assets. For example, as reported by Finbold in May, the Shanghai High People’s Court ruled that Bitcoin has a “certain economic value” and is protected by the country’s laws.
Interestingly, despite the ban on crypto services, new data indicates that more Chinese residents are still trading various assets. As reported by Finbold, China now ranks tenth globally in terms of crypto adoption.
