Shenzen Arbitration Commission: It’s Legal to Hold, Transfer Bitcoin
Ever since Chinese authorities banned domestic cryptocurrency exchanges and ICOs in 2017, the cryptoverse has wondered what might come next in the nation. Accordingly, the Shenzen Arbitration Commission has now ruled bitcoin specifically qualifies as “property” under Chinese law, and thus its users enjoy certain legal protections.
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‘Protected By Law as a Property,’ Says Arbiters
The Shenzen Arbitration Commission (SZAC), an arbitration tribunal for domestic and international parties in China, ruled this week that Chinese law doesn’t prohibit private ownership of, and transactions via, bitcoin.
The judgment was delivered over an equity transfer contract dispute amid three parties in which bitcoin, bitcoin cash, and bitcoin diamond were involved. One of the individuals refused to return sums of BTC, BCH, and BCD per an agreed contract.
The individual who broke the contract, dubbed Respondent C in the arbitration documents, argued it was an invalid contract because digital currencies were illegally involved.
SZAC came out against that line, finding that the contract was completely valid regardless of the involvement of cryptocurrencies therein.
“Chinese laws and regulations do not prohibit privately held and legally transferred bitcoin,” the tribunal explained.
SZAC went on to note that while bitcoin didn’t strictly qualify as virtual property or legal currency under the current dictates of Chinese law, such a reality doesn’t mean the cryptocurrency and others like it weren’t “protected by law as a property” in a literal sense.
On that basis, SZAC ruled against Respondent C.
“This is the meaning of the parties’ agreement and does not violate the legal provisions,” SZAC said. “The arbitral tribunal recognizes this.”
Crypto Uneven in China
SZAC’s ruling is an unprecedented one, but there are many layers of government in China, and factions within those layers, and as such there’s no telling what the legal situation might look like for cryptocurrency users there in several years.
The Chinese Communist Party is the ultimate authority in the nation, and SZAC and other bodies like it can only work within the legal margins they are provided with — margins that can widened or narrowed more or less at will via coordination in the CCP.
Some near the top of the party, like People’s Bank of China deputy governor Pan Gongsheng, have dashed cold water on bitcoin in the past.
“There is only one thing left to do: sit by the river bank and see bitcoin’s body pass by one day,” Gongsheng said last December.
Some have feared that attitudes like that would lead to an all-out ban on cryptocurrency mining in China. However, this year the only mining regulation Chinese authorities have undertaken has been investigating “non-standard” electricity usage at related operations.
Bitcoin as ‘Property’ … Where Have We Heard That Before?
Bitcoin’s clarification as property by the Shenzen Arbitration Commission is a positive, if overridable, legal touchstone for cryptocurrency users in China going forward.
But in America, the Internal Revenue Service’s similar designation of bitcoin and cryptocurrencies as property has been an enduring source of consternation for U.S. crypto users.
That’s because, as the law stands, such a designation means American users face capital gains tax considerations with every crypto trade or transaction, no matter how small or large.
That frustrating dynamic is compounded by the fact that the U.S. Commodities Futures Trading Commission thinks cryptocurrencies are commodities. And the Securities and Exchange Commission thinks most are securities. And there are more differing takes where those came from in the U.S. government.
Thus, in its own way, the crypto landscape in the U.S. is uneven too, and further clarification is being demanded in kind.
What’s your take? Would you use cryptocurrency in China if you traveled there? Let us know in the comments section below.
Images via Pixabay