Chinese arbitration court ruled that Bitcoin is property with an economic value and should have legal protection, despite the ban on the People's Bank of China to trade cryptocurrencies.
On Thursday, the Shenzhen Court of International Arbitration published a report on the social network WeChat, devoted to the recent economic debate about the business of contracts for the possession and transfer of digital assets.
According to the document, the plaintiff signed a contractual agreement with the defendant under which the latter was allowed to trade and manage cryptocurrencies on behalf of the plaintiff. However, the defendant has failed to fulfill the obligations and refused to return the cryptocurrency after the expiry of the stipulated period. In the end, the plaintiff filed a lawsuit, hoping to regain his assets with interest. It was about 20 Bitcoin, 50 Bitcoin Cash and 13 Bitcoin Diamond total cost of about 495 thousand dollars.
While there's no specific law in China governing cryptocurrencies, the arbitrator's analysis offers a window into its thinking on the nature of the financial technology.
The main argument of the defendant was a ban imposed by the People's Bank of China on the cryptocurrency trade and ICO. Since all cryptocurrency payments and transactions are illegal, the contract concluded was no longer valid, the defendant claimed. In addition, he noted that the ban deprived him of the opportunity to use a special platform through which he could transfer the bitcoin to the plaintiff.
However, these arguments did not impress the court, which stated that the crux of the matter lies in the return of the cryptocurrency. The People's Bank of China, who banned the cryptocurrency trading in the fall of 2017, in no way precludes the fulfillment of these obligations. The court also added that Chinese law does not prohibit citizens to own bitcoins and transfer them to each other.
The report stated:
"The Arbitration Court noted that the main Chinese bitcoin exchanges closed after September 2017. However, the defendant had the opportunity to transfer to the claimant of Bitcoin and Bitcoin Cash in due time."
The court held that the cryptocurrency should be protected contract law regardless of whether bitcoin is legal tender in the territory of China or not. According to one of the members of the arbitration court, Bitcoin represents an economic value, but also has signs of ownership, the possession of which is allowed.
The court is one of the Arbitration committees established in China after the country enacted a law in 1995 enabling administrations of cities to create such entities to resolve various disputes in the fields of business, finance and real estate.