Chinese Arbitration Court lately announced a verdict stating there is no repudiation on Bitcoin holding in China and said that it should be preserved as property. The decision, announced by the Shenzhen Court of International Arbitration reinforces that Bitcoin is guarded by law.
Bitcoin As Property
The court announced the judgment in a matter produced before it emphasizing a dispute over a deal including the transfer of digital currencies. According to the Bitcoinist, an unnamed plaintiff and the defendant joined into an understanding where the defendant ran a cryptocurrency portfolio on behalf of the former.
Giving its verdict, the Chinese arbitration court directed the defendant to pay the plaintiff the sum of $401,780 for violation of an agreement. Since no financial power in the land issues cryptocurrencies, the court didn’t accept the application for payment of interest on the part of the defendant.
CnLedger, a leading crypto and blockchain news source within China, has said that members of the Shenzhen Court of International Arbitration modified a matter to this new technology.
1/ Chinese court confirms Bitcoin protected by law. Shenzhen Court of International Arbitration ruled a case involving cryptos. Inside the verdict: CN law does not forbid owning & transferring bitcoin, which should be protected by law bc its property nature and economic value.
— cnLedger (@cnLedger) October 26, 2018
This case is a fight over equity transfer, which is a new kind of problem because it includes specific varieties such as BTC (Bitcoin), BCH (Bitcoin Cash) and BCD (Bitcoin Diamond). At the moment, China has not explicitly outlined the idea, constitutional characteristics, and distribution of bitcoin based on blockchain technology at the judicial and legislative level. Under the current statutory system, the arbitral tribunal declared the property characteristics of Bitcoin in accordance with the terms of the General Principles of the Civil Law, the “Contract Law” and the contractual agreement.
Chinese Arbitration Court’s Decision
The Chinese arbitration court stated that according to the applicable stipulations of the “Announcement on the Prevention of Financing Risks of Tokens Issuance”, Bitcoin is not circulated by the financial jurisdictions. It does not have commercial properties such as statutory and obligatory. It also does not have the legal status equal to currency. It should not be utilized as a currency in the market. However, there is no rule or law that explicitly prevents people from carrying bitcoin or private transactions in bitcoin.
The court also stated that bitcoin, bitcoin cash, etc. can be transferred by using Internet technology. Although it has particularities in possession and publicity of rights change methods, it does not prevent it from becoming an object of delivery. The respondent did not deliver the bitcoin, which was jointly agreed by both parties and was deemed to have property significance, in accordance with the contractual agreement, which constituted a breach of contract.
The court concluded bitcoin should be lawfully preserved by China’s Contract Law, despite its situation as unlawful tender in the China:
Bitcoin has the nature of a property, which can be owned and controlled by parties, and is able to provide economic values and benefits.
Crypto Traders And VPNs
Despite various attempts by the Chinese government to stop all local exchange platforms, traders are still trading and avoiding the ban by displaying themselves under various domain names. Crypto traders in China have found ways to bypass the government’s ban on cryptocurrency trading and initial coin offerings (ICOs) by using Tether (USDT) and virtual private networks (VPNs).
Traders are moving their servers outside China and registering their legal organizations offshore. Chinese traders also use “client to client” trades. It is just like a normal e-commerce website. In this, online merchants sell their goods on an e-commerce website and after that two individuals who have both completed a “know-your-customer” procedure with an exchange swap “fiat” currencies, or legal tender of a government, to tether. After receiving the tether, the trader can start trading crypto-to-crypto on any exchanges by using virtual private networks (VPNs).
Right now there are no restrictions on using VPNs in China, giving a potential loophole for traders to access exchange platforms. Also, regulators are working with third-party payment providers to stop processing transactions suspected to be associated with cryptocurrencies. Cryptocurrencies like Bitcoin, tether give privacy protection when trading and making online payments and VPN provides security for their online presence. Using a combination of both tether and a VPN crypto traders hide their digital footprints.