In a landmark ruling the Shenzhen Court of International Arbitration affirmed Chinese citizens’ rights to own and transfer crypto currencies. The ruling came about from a legal dispute over ownership and transfer of $500,000 worth of crypto. The parties were an individual and crypto storing service company WeChat. The defendant (WeChat) argued that crypto currencies were not legal tender in China. And that due to new laws banning crypto currencies, exchanges, ICOs, and mining, the company was prevented from returning the plaintiff’s stored funds. The court, however, ruled that Bitcoin is ‘Personal property’ and as such it could be legally transferred between parties.
The recognition of digital currency as property is a fundamental status shift for China and the world. The ruling comes at a time where clarity about crypto is lacking and different interpretations of the nature of Bitcoin exist. For China it creates a loophole in its constraints of crypto trading and distribution. It continues China’s ambiguous stance in how to manage a crypto economy without affecting the Yuan. China’s official definition of crypto currencies as property is in line with the US CFTC’s and IRS’ characterization of it as a commodity – A tangible, tradeable, asset. However, to the SEC, most crypto currencies remain securities. For the rest of the world, it creates a new piece of a global puzzle relating crypto to the international community.
Every country and region have a favorable, unclear, or contentious outlook on crypto. For example, in India, the Reserve Bank (RBI) is engaged in an entrenched battle with exchanges and enterprises. They quarrel over the risks crypto currencies pose to the national monetary system. In the US, Japan, South Korea, Malta, Singapore, Switzerland, Australia, and the UK, the use and trade of Cryptocurrencies is legal but there is no consensus on how to integrate them in the global market. Just as there is no general agreement on how to regulate manipulation, or money laundering using crypto. Thus, when China, who sways the market through its many influences, deem crypto property, it sets a considerable precedent on future legislation and the handling of it.
Whether unintentionally or by design, China’s court managed to force regulators worldwide to reevaluate and contend their positions on Bitcoin. And to make certain assumptions on how to interact with China’s opinion of Bitcoin. If adopted, treating Bitcoin as property would help put Bitcoin one step closer to adoption. As with payments, it can use a similar legal frame as that currently used for fiat. And it would speed up the development of a universal trading platform. One that can open the doors to all countries and markets.