In a landmark development for digital asset regulation in China, the Shanghai High People's Court has officially recognized cryptocurrency as having "property attributes" under the country’s legal framework. This means that while cryptocurrencies like Bitcoin and Ethereum are not considered legal tender, they can be treated as tradable commodities—offering a nuanced shift in how digital assets are perceived within one of the world’s most restrictive regulatory environments.
This ruling comes amid growing global interest in blockchain technology and digital finance, particularly as nations explore central bank digital currencies (CBDCs) and decentralized financial systems. However, China continues to maintain strict controls over cryptocurrency usage, especially concerning fundraising and monetary circulation.
Cryptocurrency Recognized as Property, Not Currency
The court emphasized that although digital assets possess value and can be legally held or traded as goods, their use as currency or for large-scale commercial transactions remains strictly prohibited. The judgment underscores a clear distinction: cryptocurrencies may have commodity status, but they cannot function as money in the traditional sense.
This decision was made in the context of a fraud case involving two companies—agricultural development and investment management firms—that entered into an agreement to issue virtual tokens. The project ultimately failed, leading to disputes over fund allocation and allegations of deception.
While the court acknowledged the property rights associated with crypto holdings, it strongly condemned the act of raising capital through token sales, labeling such activities as illegal public financing.
“Raising funds by issuing and circulating tokens without authorization, using so-called ‘virtual currencies’ like Bitcoin or Ethereum, is essentially an unapproved and illegal form of public financing,” the court stated. “No organization or individual shall engage in illegal token issuance or fundraising activities.”
This reaffirms China’s long-standing ban on initial coin offerings (ICOs) and crypto-based fundraising mechanisms, first introduced in 2017.
Legal Protection Does Not Equal Regulatory Approval
Despite recognizing the property value of cryptocurrencies, the court made it clear that this does not imply endorsement of broader crypto adoption. The ruling protects individual ownership rights—meaning holders can seek legal recourse if their assets are stolen or misappropriated—but only when those assets are treated as goods, not financial instruments.
For example:
- Holding Bitcoin as an investment may be legally protected.
- Using Bitcoin to pay employees or settle international trade invoices remains illegal.
- Launching a new token or conducting an ICO is still a criminal offense under Chinese law.
The judgment reflects a cautious approach: acknowledging technological reality without relaxing financial oversight.
👉 Discover how global markets are adapting to evolving crypto regulations.
Broader Context: Blockchain vs. Cryptocurrency in China
China maintains a sharp divide between blockchain technology and cryptocurrencies. While it actively promotes blockchain innovation—especially for supply chain tracking, smart contracts, and cross-border payments—it remains deeply skeptical of decentralized digital money.
Notably:
- The digital yuan (e-CNY), China’s central bank digital currency, is being tested in multiple cities and used in international settlements.
- At the BRICS summit, Chinese officials supported exploring blockchain solutions for cross-border payment efficiency.
- Domestic tech giants continue to invest heavily in enterprise-grade blockchain platforms.
However, private cryptocurrencies remain under tight restrictions:
- Crypto mining was banned nationwide in 2021.
- Exchanges and trading platforms are outlawed.
- Banks and payment institutions are forbidden from processing crypto transactions.
Even though Hong Kong has approved spot Bitcoin ETFs—offering mainland investors indirect exposure via the Greater Bay Area framework—these exceptions do not signal a nationwide policy shift.
Global Implications and Competitive Pressures
Internationally, momentum around digital assets is accelerating. Former U.S. President Donald Trump has publicly advocated for Bitcoin reserves as a strategic tool against China’s economic influence. Meanwhile, Tron founder Justin Sun has urged China to embrace blockchain innovation more fully, warning that current restrictions could allow other nations to gain decisive technological advantages.
Russia, for instance, has taken a more permissive stance on cryptocurrency, allowing its use in foreign trade settlements—a move that contrasts sharply with Beijing’s caution.
Still, there are no signs of a major policy reversal in mainland China. The Shanghai ruling reinforces the idea that limited recognition does not equal liberalization. The government appears willing to acknowledge crypto's existence and economic function—but only within tightly controlled boundaries.
Key Takeaways from the Ruling
- Cryptocurrency has property value – It can be legally owned and protected if treated as a commodity.
- Fundraising via tokens is illegal – ICOs, STOs, and similar models remain banned.
- Use as currency is prohibited – Payments, salaries, or pricing in crypto violate financial regulations.
- Blockchain is encouraged – Especially for non-financial applications like logistics and data verification.
- Risk lies with users – Investors assume full responsibility; no government-backed protections exist.
👉 Stay ahead of regulatory changes shaping the future of digital finance.
Frequently Asked Questions (FAQ)
Q: Can I legally own cryptocurrency in China?
A: Yes, individuals can hold cryptocurrency as a form of digital property. However, you cannot use it for transactions or convert it through domestic exchanges.
Q: Is buying Bitcoin illegal in China?
A: There is no explicit law banning personal ownership, but purchasing crypto through foreign platforms carries risks. Financial institutions are prohibited from facilitating such transactions.
Q: Can Chinese companies issue their own tokens?
A: No. Any form of unauthorized token issuance is considered illegal fundraising and may lead to criminal penalties.
Q: Does this ruling mean China is softening its crypto stance?
A: Not significantly. The decision recognizes economic reality but maintains strict prohibitions on usage and issuance. It’s a legal clarification, not a policy reversal.
Q: How does the digital yuan differ from Bitcoin?
A: The e-CNY is a centralized, state-issued digital currency fully controlled by the People’s Bank of China. Bitcoin is decentralized, permissionless, and operates outside government control.
Q: Could this ruling lead to future legalization?
A: Unlikely in the near term. The government prioritizes financial stability and capital control, which conflict with open blockchain networks.
Conclusion: A Balanced but Restrictive Path Forward
The Shanghai High Court’s decision marks a subtle but important evolution in China’s approach to digital assets. By recognizing cryptocurrency as a commodity with property rights, it provides legal clarity for dispute resolution while maintaining strong guardrails against systemic risk.
For businesses and investors, the message is clear: innovation is welcome—but only within state-defined boundaries. As global markets race toward Web3.0 and decentralized finance, China continues to chart its own course—one rooted in technological adoption without compromising regulatory authority.
👉 Explore secure ways to navigate compliant crypto ecosystems worldwide.