Bitcoin is protected by Chinese law
The recently published ruling of the Shanghai Supreme People’s Court may lead to a reassessment of attitudes towards Bitcoin and digital currencies in general. This ruling puts the ownership of Bitcoins under the protection of Chinese law and assigns the crypto asset an economic value that must be protected.
In order to protect the partially insufficient energy supply in some Chinese provinces from congestion, the Chinese central government in the past banned mining and then immediately trading Bitcoin.
In addition, violators faced severe penalties — up to 10 years in prison and fines equivalent to about 79,000 US dollars.
How can the protected ownership of Bitcoin be reconciled with a strict ban on its trading? Now this issue requires a clear clarification.
China’s New System for Cryptocurrencies
The ban on Bitcoin mining can still be understood due to the extreme energy intensity of electricity consumption. But with a strict ban on BTC trade, the Chinese United Party has gone too far.
Moreover, the trade and use of all digital currencies is prohibited in China. China has even created its own central bank digital currency (CBDC) with the digital yuan and is testing it in practice.
In several cities, official payments, such as taxes and duties, can be made using the digital yuan. In the cities of Xiamen and Guangzhou, the possibility of payment was also extended to public transport.
In a recent statement, the People’s Bank of China (PBoC) announced that the CBDC pilot program will be extended to 11 more cities, bringing the total number of cities participating in the program to 23.
According to the PBoC, more than 260 million Chinese already use a wallet introduced specifically for the digital yuan, and the volume of transactions conducted through this wallet is equivalent to more than 11 billion US dollars.
By the way, the digital yuan made its wide debut at the Winter Olympics in Beijing this year. There, tickets and purchases at stadiums could be paid for in digital yuan.
Visitors could download the app or get a physical card to which digital yuan could be credited. Shops, cafes and kiosks in the Olympic Village, facilities and stations were ordered to accept payments in the CBDC.
The ban on Bitcoin trading should be reviewed, as it does not make sense if the possession of a BTC is unequivocally allowed, but buying and selling is prohibited. But the Chinese have their own views on law and justice in many areas.
In any case, with the spread of China’s own digital currency, the digital yuan, and the adoption of other cryptocurrencies, it is becoming increasingly difficult to maintain a ban on Bitcoin trading. It will be interesting to see how the development of this story will continue.