30 Sep, 2023

Bitcoin Recognized as a Digital Currency in Shanghai – Will China’s Ban Break?

Bitcoin Digital Currency Shanghai

TL;DR

  • China has put cryptocurrencies like Bitcoin and Ethereum under a strict ban starting in 2020, so you can trade, buy, or hold them on their territory.
  • As of yesterday, Bitcoin became a recognized digital currency in Shanghai, making the first step towards breaking the ban. 

Shanghai Recognizes Bitcoin as a Digital Currency

Recently, the Shanghai No. 2 Intermediate People’s Court officially acknowledged Bitcoin as a unique digital currency, even though China has officially banned cryptocurrencies. 

Shanghai Acknowledges Bitcoin as a Digital Currency.
Shanghai Recognizes Bitcoin as a Digital Currency | Source: Forbes

This recognition was brought to public attention by Justin Sun, the founder of Tron. The article published by the Shanghai court highlighted distinct characteristics of Bitcoin that set it apart from virtual counterparts like Q coins.

It emphasized Bitcoin’s rarity, global acceptance, and inherent monetary qualities. This marks a departure from China’s traditional classification of cryptocurrencies as speculative investments.

China’s Crypto Ban Remains Strong 

Regulatory bodies in China have prohibited cryptocurrency trading and mining. However, the court expressed that Bitcoin’s attributes make it challenging to ignore in legal contexts. 

The article suggests that when disputes about theft or ownership arise, people can consider Bitcoin as personal property they obtain through purchase, mining, or inheritance.

This announcement builds upon a previous decision by a Shanghai court in May 2022 that also acknowledged Bitcoin’s legitimacy. 

At that time, a legal expert argued that China’s laws could protect cryptocurrency holders despite the trading ban. It’s essential to note that the recent article does not represent an official policy shift. 

The ban on cryptocurrency trading remains firmly in place. However, recognizing cryptocurrency as property strengthens legal positions related to ownership within the existing constraints.

China is one of the few countries with a full blanket ban on cryptocurrency while still racking immense trading volumes and total crypto owned. 

According to the Wall Street Journal, Binance users traded cryptocurrency-related assets valued at $90 billion within a month in China, although such trading has been prohibited since 2021. 

Chinese Crypto Controversy
Chinese Crypto Controversy – Can Crypto Become Legal In China? | Source: Reuters

This information is based on internal data and insights from the exchange’s current and former employees.

These transactions established China as Binance’s largest market by a substantial margin, representing 20% of the global trading volume, excluding transactions conducted by a select group of huge traders. 

The report does not specify the exact month of these transactions.

In another interesting development of the crypto industry in China, numerous Chinese courts have affirmed the property rights of virtual asset holders.

Crypto holders in China are legally protected against theft, misappropriation, and loan breaches despite the crypto ban.

Can China waive the ban on crypto in the next five years? With the current political condition in the country, it’s highly improbable. 

However, if the climate changes, we can see China rise as a new Asian crypto hub in the next ten years…