There is already a complete ban on digital assets in China, but the country’s cryptocurrency sector is being further regulated as the industry grows.
According to a May 7 post from an international magazine, the country’s Supreme Court has issued new instructions for handling cryptocurrency-related disputes, including a statement that it is legal to settle a debt using a small quantity of digital assets provided both sides agree.
In this case, the court acknowledged the virtual network characteristics of these currencies. The court did stress that this method would only be allowed if there were no other good reasons to prevent it.
In addition, the highest court made it clear that if one party agrees to transfer cryptocurrencies to another but the receiving party is unable to fulfill their end of the deal due to policy restrictions, the court will determine the compensation based on the actual value of the property accepted by the receiving party at the time of signing the contract.
China’s contradictory stances on crypto
Investors in cryptocurrencies should pay close attention to this recent move, as it highlights China’s changing stance on digital assets. Despite China’s ban on these currencies, investor enthusiasm has been rising in recent weeks. China’s position in the top ten countries on the global crypto adoption index in a research published in late 2022 is indicative of the country’s growing interest in this currency.
Interestingly, the Beijing Number One Intermediate People’s Court declared that citizens can still trade cryptocurrencies notwithstanding the ban, as reported by Finbold in September 2022. But there’s a catch: the court ruled that participants couldn’t actually use them as currency, just as a form of virtual investment.
So, it’s not clear if the Supreme Court’s latest recommendations mean that the government finally acknowledges the legitimacy of these currencies.
China appears to be acknowledging the rising interest in digital assets despite this uncertainty. Individual investors and Bitcoin (BTC) miners are subject to a 20% personal income tax on investment returns in the country, according to a recent report by Finbold.
To read our article about “Crypto trader arrested for laundering $12 million fraud” click here.