Chinese Court Recognizes Cryptocurrencies as Commodities Under Law
China's High Court has clarified its position on cryptocurrencies, recognizing their "property attributes" under Chinese law. This classification allows cryptoassets to be treated as commodities but excludes them from being recognized as currency or business instruments. Although this acknowledgment provides limited legal protections, the court maintained that fundraising through token issuance or circulation is illegal.
The ruling emerged from a case involving two companies in a fraud dispute related to a failed token launch. The court condemned their actions as illegal public financing and reiterated that no entity or individual may engage in unauthorized token issuance or fundraising, highlighting China's stringent regulatory framework.
Despite this firm stance, the court's recognition of crypto as a commodity implies potential legal applications. This perspective aligns with China's selective endorsement of blockchain technology, particularly for cross-border payments and trade facilitation. At the recent BRICS Summit, China emphasized blockchain's role in international trade, including cryptocurrency transactions with Russia. Furthermore, the digital yuan, China's CBDC, has been incorporated into various global trade initiatives.
China's stringent crypto policies have ignited global debates regarding its position in the evolving digital asset landscape. While Hong Kong recently approved its first Bitcoin ETF, providing mainland investors indirect exposure to Bitcoin, China continues to restrict broader cryptocurrency usage. Meanwhile, other countries, including the U.S., are contemplating utilizing Bitcoin to counter China's economic influence.
The High Court’s ruling illustrates China's cautious approach toward crypto. While acknowledging its value as a commodity, the court expressed concerns about the risks associated with token launches and cryptocurrency transactions. It warned that Bitcoin and similar assets could disrupt financial systems and facilitate illegal activities, reinforcing the country's entrenched anti-crypto stance.
Although figures like Tron founder Justin Sun advocate for increased adoption of blockchain technology in China, there are minimal indications of significant policy changes. For now, China remains focused on regulating crypto usage, permitting it only in specific contexts while maintaining strict control over the broader industry.