property

KEY TAKEAWAYS Shanghai court recognises cryptocurrencies as legal property, allowing individuals to hold, buy, and sell digital assets like Bitcoin. Crypto-related business activities like token issuance, trading, and initial coin offerings remain prohibited in China. The ruling raises the question of whether this could signal a global shift towards broader acceptance of cryptocurrencies, especially in light of Donald Trump's potential impact on crypto regulation in the United INTRODUCTION: CRYPTO LEGITIMISED AS PROPERTY In a recent opinion published on the Shanghai High Court's official WeChat account, Judge Sun Jie ("Judge Jie"), a judge at the Shanghai Songjiang District People's Court (the "Court"), confirmed that it is not illegal for individuals in China to hold, buy, or sell cryptocurrencies, recognising them as legal property. This statement marks a significant development in clarifying the legal status of cryptocurrencies in China. While the ruling reinforces the crackdown on crypto-related business activities, such as token issuance and trading, it provides legal certainty and reassurance for individual crypto holders. In a recent article published by TLP Advisors, we discussed how Donald Trump's victory in the United States presidential election could potentially bring far-reaching and unexpected effects on the global crypto landscape. Against this backdrop, the Court's ruling raises an important question: is this a small step toward a broader global shift in crypto acceptance? Could this ruling, alongside similar developments, signal a growing recognition of cryptocurrencies as a legitimate asset class across major jurisdictions? IMPLICATIONS FOR INDIVIDUALS: LEGAL PROTECTION BUT LIMITED FREEDOM Recognition of Crypto as Property The Court's acknowledgement that cryptocurrencies possess the attributes of property signals a positive development for crypto enthusiasts. This classification ensures that individual ownership of digital assets like Bitcoin is protected under Chinese property laws, allowing citizens to legally hold and transfer these assets without fear of confiscation or legal penalties. However, this protection applies to ownership, not to unrestricted trading or investment in virtual currencies. Business Restrictions Remain Intact While individuals now appear to have legal clarity regarding ownership, businesses remain prohibited from engaging in crypto-related activities such as token issuance, operating trading platforms, and conducting initial coin offerings. The opinion emphasised that such commercial activities violate financial regulations, disrupt economic stability, and threaten public order. As a result, these activities are not merely regulated but are classified as illegal financial conduct under Chinese law. FUTURE OUTLOOK: WILL CHINA OPEN UP TO CRYPTO? China's recognition of cryptocurrencies as legal property is an important yet cautious step. Although this decision does not ease the country's strict regulations on crypto businesses, it signals the possibility of gradual changes in the future. If global markets, such as the United States, continue integrating digital assets, China may face increasing pressure to rethink its current stance to stay competitive in the evolving digital economy. Nevertheless, this aligns with other jurisdictions that have chosen to recognise cryptocurrencies as property, as seen in court decisions in Singapore and the United Arab Emirates ("UAE"). COMPARISON: CHINA VS UAE – TWO CONTRASTING APPROACHES TO CRYPTO China: Cautious Recognition with Strict Controls Despite these developments, the country's strict stance on crypto-related business activities remains unchanged. China focuses on controlling the broader crypto ecosystem to avoid financial market instability, citing concerns over illegal fundraising, money laundering, and fraud. The government emphasises maintaining regulatory control, preventing speculative trading, and minimising using cryptocurrencies for illicit activities. While the individual market may have some freedom, the commercial space remains tightly regulated, making it difficult for businesses to thrive in the crypto sector within China's borders. UAE: Proactive Regulation and Innovation In contrast, the UAE has emerged as a global leader in creating a comprehensive regulatory framework for cryptocurrencies. Through entities like the Virtual Assets Regulatory Authority and the Abu Dhabi Global Market, the UAE not only acknowledges the legitimacy of cryptocurrencies but also offers a structured environment for businesses to operate, fostering innovation and attracting international players. By regulating exchanges, token issuances, and digital asset service providers, the UAE ensures investor protection while promoting the growth of the crypto sector. This open and forward-thinking approach positions the UAE as a dynamic hub for crypto innovation, supporting many global firms looking for a stable and progressive regulatory landscape. The country has embraced the digital asset industry as part of its broader ambition to become a global leader in finance and technology, creating a favourable environment for growth and development. CONCLUSION: A CAUTIOUS VICTORY FOR CRYPTO HOLDERS China's cautious approach to crypto recognition, while a positive move for individuals, limits the potential for growth in the crypto market. Its stringent controls on business activities continue to stifle innovation and prevent domestic players from fully engaging in the global crypto economy. As the global crypto landscape evolves, the question remains whether China will eventually reconsider its restrictive policies. For now, crypto holders in China can take solace in knowing that their digital assets are protected under the law, even as the country maintains its cautious approach to the industry. *** TLP Advisors is a dynamic and forward-thinking consulting, strategy and law firm specialising in providing cutting-edge solutions to our diverse clientele. With our roots deeply embedded in financial services, gaming, web3, and emerging tech, we offer unparalleled knowledge and support tailored to these rapidly evolving sectors' unique challenges and opportunities. TLP Advisors has consistently been the firm of choice for L1 chains, DeFi protocols, gaming companies, fintech and payment companies, foundations, funds, and investors. We have built a reputation for excellence through frequent collaborations with regulators, funds, and technology incubators. Our deep understanding of the intricate regulatory landscapes and industry dynamics allows us to provide strategic guidance and innovative solutions that empower our clients to navigate complex challenges and seize emerging opportunities. www.techlawpolicy.com *** Judge Sun Jie, "Issuing virtual currencies to raise huge amounts of funds, what is the end?," Shanghai High Court (18 November 2024), https://mp.weixin.qq.com/s?__bizMzA3MjcxNDM5OQ&mid2650784656&idx1&sn12cb5b68872ef0e5a8135b9709b5c356&scene21&poc_tokenHFuASWejhg3VwZj-agDyz1lnsv2TFR4cWJfRdZ5O. Soham Jethani, et. al., "Trumping the Crypto Landscape: Could a Second Term Reshape the Future of Crypto in the US?," TLP Advisors (7 November 2024), https://techlawpolicy.com/2024/11/trumping-the-crypto-scene-could-a-second-term-reshape-the-future-of-crypto-in-the-us/. ZeMing M. Gao, "Digital Assets Are Subject to Property Laws", CoinGeek (8 August 2022), https://coingeek.com/digital-assets-are-subject-to-property-laws/. Francis Shin, "What's behind China's cryptocurrency ban?," World Economic Forum (31 January 2022), https://www.weforum.org/stories/2022/01/what-s-behind-china-s-cryptocurrency-ban/ Wahid Pessarlay, "Singapore High Court Deems Digital Assets as Trustable Property," CoinGeek (2 August 2023), https://coingeek.com/singapore-high-court-deems-digital-assets-as-trustable-property/ Soham Jethani, et. al., "Dubai Court Embraces Crypto: Employment Salaries may now be Payable in Cryptocurrencies", TLP Advisors (24 August 2024), https://techlawpolicy.com/2024/08/dubai-court-embraces-crypto-employment-salaries-may-now-be-payable-in-cryptocurrencies/. Soham Jethani and Pankhuri Malhotra, "UAE: A Crypto Asset Hub," TLP Advisors (01 January 2023), https://techlawpolicy.com/2023/01/uae-a-crypto-asset-hub/.