As a seasoned crypto investor with roots deeply planted in the East and West, I’ve seen my fair share of market turbulence and geopolitical shifts. The recent ruling by the Shanghai High Court has left me both intrigued and cautious. On one hand, it acknowledges the commodity nature of cryptocurrencies and refrains from outright prohibition – a step in the right direction for those who believe in the potential of blockchain technology. However, the harsh stance on using crypto for major transactions and token launches serves as a stark reminder that China’s official policies towards crypto remain rigid and unyielding.
According to a recent decision by the Shanghai High Court, cryptocurrencies possess “characteristics of property.” It’s important to note that Chinese law does not explicitly ban them. Nevertheless, the legal safeguards pertain to cryptos regarded as commodities, and not as currency or financial instruments for business purposes.
In a fraud case that involved two companies and an unsuccessful token sale, the court severely criticized their actions using particularly harsh language.
China’s Harsh Crypto Policy
A recent WeChat post indicates that the ruling was connected to a conflict involving an undisclosed agricultural development company and a financial investment manager, as well as an accord about digital currency issuance.
According to the High Court’s decision, it is unlawful to generate digital currencies like Bitcoin and Ethereum by illegally asking for investments through the production and distribution of tokens. This action can be considered as an unauthorized form of public fundraising without proper authorization. Consequently, no entity or individual should participate in the illegal issuance and financing of such tokens.
In addition to this decision, the High Court also made other judgments regarding this case. While the ruling was quite strict in addressing the main disagreement between the two companies, it emphasized that cryptocurrencies have applications beyond just this dispute.
The Court argued that the inherent worth of cryptocurrencies lies within their commodity nature, and there are no restrictions preventing its utilization.
China’s Changing Paradigm?
After China’s 2021 prohibition on Bitcoin mining, there’s been a significant global curiosity about reintroducing cryptocurrency into China’s massive economy. This year, Hong Kong has given the green light for its first Bitcoin Exchange-Traded Fund (ETF), allowing mainland investors to participate in Bitcoin markets.
At the BRICS Summit, China also expressed support for cryptocurrency and blockchain technology, particularly in relation to cross-border payment systems. Unlike Russia, who expressed broader optimism towards cryptocurrencies, it appears that China has been employing cryptocurrency in its trading activities with Russia.
The nation in question also boasts a Central Bank Digital Currency (CBDC), known as the digital yuan, that is currently being employed for various cross-border transactions.
Moreover, Donald Trump, the newly elected U.S. President, put forward the idea of utilizing Bitcoin as a means to challenge Chinese economic dominance. Justin Sun, a Chinese citizen and founder of Tron, suggested that China should adopt this technology. Sun cautioned that China’s stringent regulations in the industry could potentially allow other nations to seize a significant technological lead.
Regardless, there’s scant evidence of China changing its firm position regarding cryptocurrency. Although the High Court recognized potential legal uses for cryptocurrencies, it handled the specific case quite sternly.
It’s said that the investment manager involved in this situation allegedly deceived their business partner to finance a cryptocurrency token offering. The Chinese court recognized this as one potential drawback when dealing with digital currencies like cryptocurrencies.
The Court emphasized that using crypto for major business transactions, especially for launching new tokens, remains strictly forbidden. It went as far as stating that Bitcoin could disrupt the financial system and serve as a tool for illegal activities. This reflects how firmly entrenched China’s anti-crypto stance remains in its official policies.
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2024-11-19 20:37