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Bitcoin legal in China – Huangzhou court declares Bitcoin virtual property

Regulation and investing in Bitcoin, Libra and other crypto currencies was again a very hot topic in the past days. After statements of US President Donald Trump and US Federal Reserve Chief Powell, politicians in Germany and all over Europe have expressed themselves on this topic.

These opinions swing since some US senators statements again in a more positive direction and thus it is calculated the Bitcoin opponent country China, which places itself now apparently behind the crypto currency. At least in a small local court in Hangzhou.

In a tweet by Dovey Wan, the entire joy of the Crypto community is unleashed on Twitter. According to their tweet and a referenced source, the Hangzhou Internet Court has legally recognized Bitcoin as a virtual property with financial value for the first time in China. This makes investing more interesting.

To make it clear, this is not the first time that Bitcoin has been described as a legal asset in China by the Chinese judicial authorities. In 2018, the Shenzhen Arbitration Commission declared that "the asset should be protected under the law" and is legal for ownership and transfer.

The Hangzhou Internet Court now adds credibility to Bitcoin in China by officially declaring the virtual currency legal. Bitcoin meets the virtual property requirements because Bitcoin has value, is scarce and distributable.

While this will not bring the banned Bitcoin and Crypto trade back to China, it does give Bitcoin owners in the country certain rights to Bitcoin as a commodity.

New rights for Bitcoin owners in China - The Background

The verdict was reached in a case dating back several years. It describes a real estate dispute between a buyer (Mr. Wu) and the e-commerce platform TaoBao and its FXBTC exchange. The client originally wanted compensation of USD 11,000 for the loss of 2,675 Bitcoins. A lot that would have a much higher value in today's market.

The plaintiff, Wu, complained that he had not been warned of the impending closing of the exchange and therefore had not withdrawn any funds prior to its closing. However, the court rejected the plaintiff's claims for damages for lack of evidence of connection to the account and related assets.

Even more important than the judgment - at least for all but the plaintiff - is the court's statement that Bitcoin is a valuable commodity that represents an important legal precedent.

"This is a clear signal that the tax authorities are beginning to relax control over the digital currency and the virtual currency," said Cao Yin, an expert in the blockchain sector, to the Global Times.

  • Nevertheless, just because Bitcoin is finally recognized as a legal commodity in China, one should not expect the stock exchanges in the highly controlled economy to open their doors soon.
  • Nevertheless, an unexpected success for Bitcoin, even if Mr. Wu doesn't care.