Cryptocurrency Conundrum: China’s Shifting Policies and the Impact on Investors
China's digital asset regulations have continued to evolve despite the country's existing ban. The Supreme Court of China recently issued guidelines pertaining to disputes involving cryptocurrencies.
According to Wu Blockchain’s report on May 7, if both parties agree, it is now considered legally acceptable to settle a debt using a small amount of digital assets.
The court acknowledges that cryptocurrencies possess virtual properties within a network.
However, it explicitly states that this approach is permissible only if there are no other valid objections.
“When the involved parties agree to compensate debts arising from mutual exchange, labor services, and other fundamental relationships using a small amount of virtual currency, and there are no other invalid factors, the court will recognize the contract as valid,” the court ruled.
The Supreme Court provided additional clarity regarding the scenario where a party agrees to transfer cryptocurrencies to another party. In such cases, the court will ascertain the compensation by considering the property’s real value accepted by the receiving party at the moment of contract execution. Still, the receiving party cannot fulfill its obligations due to policy restrictions.
China’s stance on cryptocurrencies remains contradictory, and this recent development carries significant implications for cryptocurrency investors.
Despite China’s ban on cryptocurrencies, investor interest has surged recently. A report from late 2022 revealed that China ranked among the top ten countries globally in terms of crypto adoption.
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It was stated that the Beijing Number One Intermediate People’s Court declared that individuals were still allowed to participate in cryptocurrency trading despite the prohibition.
However, there is a condition to be noted: the court specified that interested investors could only consider cryptocurrencies as virtual assets and refrain from using them as a currency.
As a result, it remains uncertain whether the recent directives from the Supreme Court indicate the acknowledgment of cryptocurrencies’ legal status by the Chinese government. Nevertheless, China seems to acknowledge the increasing interest in digital assets.
Previously, as mentioned in a Finbold report, the country imposed a 20% personal income tax on investment profits earned by individual cryptocurrency investors and Bitcoin (BTC) miners.
Alexander Stefanov
Reporter at CoinsPress
Alex is an experienced finance journalist and a cryptocurrency and blockchain enthusiast. With over five years of experience covering the industry, he deeply understands the complex and constantly evolving world of digital assets. His insightful and thought-provoking articles provide readers with a clear picture of the latest developments and trends in the market. His passionate approach allows him to break down complex ideas into accessible and insightful content. Follow up on his content to be up to date with the most important trends and topics - stay ahead of the curve with CoinsPress.
