Bitcoin declared legal commodity by Chinese court

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Thursday saw the first case involving a Bitcoin property infringement dispute take place in China. As a result of the subject being debated in court, it has now been officially, and legally, confirmed in the country that cryptocurrency is a “virtual property,” marking the first time the Chinese legal system has addressed the subject of digital assets.

According to a report by the China Securities Network, “[The] Hangzhou Internet Court held that Bitcoin has the value, scarcity and disposableness of property as a subject of rights, and should be recognized as its virtual property status. Insiders pointed out that this is the first comprehensive discussion on the virtual property of Bitcoin in China’s courts. The judiciary’s determination in the judgment has an extraordinary significance in dealing with disputes and disputes arising from other virtual currencies such as Bitcoin in the future.”

The court’s decision provides a stronger foundation of legitimacy for crypto in China, but also has ramifications elsewhere. In the U.S., the Internal Revenue Service, responsible for collecting taxes—and punishing those who don’t pay—has also said that Bitcoin is property and, if more alignment comes regarding the legal status of crypto, it will help foster a better, unified global position for further adoption.

The Chinese courts took up the case following a dispute between a crypto enthusiast, only identified as “Wu,” who purchased crypto from Shanghai-based FXBTC in 2013. At the time, he had purchased 2.675 SegWitCoin (BTC), which would have been worth around $620 at the time. He tried to access the FXBTC site in 2017, when the value would have been close to ten times that amount, only to find that the website was no longer operational and he was never able to recuperate his funds.

Wu ultimately took the company to court for property infringement. The court determined that Wu had not successfully proven that any illegal activity had taken place, in the eyes of Chinese law. However, it also stated that crypto has been previously defined as crypto given language in the General Principles of Civil Law, which were implemented in 2017. That legal framework specifies that virtual goods, including digital currencies, are legal defined as property.