China’s Supreme Court Ruling on Crypto Debt Settlements

In a recent ruling, China’s Supreme Court has allowed for the settlement of debts using cryptocurrencies, given that both parties agree. This development demonstrates that despite the country’s ban on cryptocurrencies, its regulatory approach is evolving.

China’s Supreme Court ruling on crypto debt settlements marks a significant development in the country’s regulatory approach to digital assets. While the legal status of cryptocurrencies remains uncertain, this ruling signals a possible shift in China’s stance on the matter, with investor interest continuing to rise.

The Supreme Court Ruling

According to China’s Supreme Court, cryptocurrencies can be used to settle debts arising from labor services, mutual exchanges, and other basic human interactions if both parties consent. The court emphasized that this approach is valid only if there are no other invalid causes. Additionally, the court clarified that if one party fails to fulfill their contractual obligations after receiving cryptocurrency, the court will determine compensation based on the property’s value at the time of the contract signing.

China’s position on cryptocurrencies has been ambiguous, with a blanket ban in place but some flexibility in interpreting and enforcing regulations. The recent Supreme Court ruling shows a continued evolution in China’s digital asset regulation, signaling a potential shift in its stance. In 2022, a Beijing court ruled that citizens could still trade cryptocurrencies as virtual assets but not use them as currency.

Legal Recognition of Cryptocurrencies in China

Despite the Supreme Court ruling, it is unclear whether the Chinese government recognizes the legal status of cryptocurrencies. The Beijing Number One Intermediate People’s Court ruled in an outstanding loan case that crypto could be considered personal property, similar to data, but not meeting the standards of currency.

Despite the ban on crypto in China, investor interest has surged. China ranked among the top ten countries in the global crypto adoption index in 2022. Furthermore, the country implemented a 20% income tax on profits made by Bitcoin miners and individual cryptocurrency investors, acknowledging the growing interest in cryptocurrencies. Investors should stay informed about the ever-changing guidelines surrounding crypto in China.