Chinese Judge Issues Stark Warning on Cryptocurrency Amid Ongoing Legal Uncertainty

A judge in Shanghai's People's Court recently clarified China's legal stance on virtual currency through an article on the court's WeChat account.

Her remarks, stemming from a 2017 business dispute, offer insight into the country’s uncertain cryptocurrency regulations.

In the case, an agricultural company sued an investment firm for failing to deliver a cryptocurrency token despite a 300,000 yuan ($44,400) payment. The court ruled that both parties were at fault, with the investment firm ordered to return 250,000 yuan.

Judge Sun Jie stated that while virtual currencies aren’t illegal to hold, they should be considered virtual commodities with property attributes, not legal tender. She emphasized that commercial entities are prohibited from engaging in virtual currency investments or issuing tokens.

The judge also warned about the risks of virtual currencies like Bitcoin, which could disrupt financial systems and facilitate illegal activities such as money laundering, fraud, and pyramid schemes. She cautioned individuals and businesses against participating in cryptocurrency transactions, as they might lack legal protection.

China’s crackdown on virtual currency exchanges began in 2017, and in 2021, authorities tightened restrictions, though personal crypto ownership remains legal.