Amid a record surge in the price of bitcoin (BTC), a court in China has issued an opinion stating that personal ownership of cryptocurrencies is not against the country's laws.

“Cryptocurrencies are a commodity and it is legal to own them, but you cannot use them,” Sun Jie, a judge at the Songjiang People’s Court in Shanghai, advised when she posted on the Chinese platform WeChat. With her statement, she opened an explicit legal door for the holding of cryptocurrencies in the Asian giant.

According to the South China Morning Post, the recommendation was made when ruling on a commercial dispute dating back to 2017, involving differences related to an Initial Coin Offering (ICO). Nevertheless, the judge's opinion shed light on the complex legal status of cryptocurrencies in China.

Sun Jie wrote that digital currency does not have the status of fiat currency, but is rather a virtual commodity with “ownership attributes.”

While it is not illegal for individuals to simply hold virtual currencies, commercial entities cannot engage in investment transactions with such assets, or even issue tokens themselves.

Judge Sun Jie

Chinese court recognizes cryptocurrencies as commodities.

The lawsuit in question was due to a claim made by an investment firm against a company that had agreed to issue a token after the launch of an ICO. This, shortly before the ban on these activities in China. Now the court finds that both companies have engaged in illegal activities and ordered the return of 250,000 yuan.

And although the judge recognized the possession of bitcoin as something valid, she continued her talk with a long warning about the possible “evils” of having cryptocurrencies. This, ignoring their properties as a store of value, which are vindicated at this time when currencies like BTC are approaching USD 100,000, at the time of writing this note.

Following the arguments of the Chinese authorities, Sun Jie commented that bitcoin trading not only “disturbs the economic and financial order, but may also become a payment and settlement tool for illegal and criminal activities, encouraging money laundering, illegal fundraising, fraud, pyramid schemes and other illegal and criminal activities.”

“Blindly engaging in virtual currency transactions may be risky,” the court concluded, citing Article 153 of the Civil Code of the People’s Republic of China. “Because individuals and businesses may not enjoy full protection under the law.”

A series of prohibitions are mentioned that occurred following this chronology:

• In 2013, banks were required not to allow transactions linked to cryptocurrencies.
• In 2014, the sale of bitcoin was banned.
• In 2017, China ordered the closure of cryptocurrency exchanges.
• In 2018, foreign cryptocurrency trading platforms were blocked.
• In 2021, the People's Bank of China and 10 government agencies joined forces to ban trading and restrict mining.

It is understood that the possession of cryptocurrencies was never prohibited, as stated in the judge's ruling. There was also no explicit ban on Bitcoin mining. As researcher Daniel Batten clarified a few months ago, what occurred was a suspension of mining activities.

Some of these restrictions may be lifted in the not-too-distant future. With Donald Trump in the US presidency, it is expected that the Chinese government will want to include cryptocurrencies in the trade war it is waging against the northern country.