He also said that China blocks all public blockchains such as Ethereum, which is used as a public ledger to support and track NFT trading. Instead, the BSN network will use custom blockchains from Ethereum and nine other platforms that meet regulatory requirements in China, such as ensuring that all users verify their identity and allow the state to intervene in the event of “illegal activity.” The Chinese government banned initial coin offerings (ICOs) in 2017 and ordered the closure of exchanges. Notably, the world`s largest cryptocurrency exchange, Binance, was founded in China, although it was forced to move outside of China after the 2017 bans. Despite this prohibition, it is generally not illegal to hold cryptocurrency in China. In October 2020, the People`s Bank of China released a bill giving legal status to the digital yuan, the central bank`s digital currency. Meanwhile, the crackdown on cryptocurrency mining has already had an effect. China reported in September 2019 to consume 75% of the world`s Bitcoin energy consumption. By April 2021, this share had fallen to 46%. Since 2015, the price of Litecoin has risen by about 1,800%, as the cryptocurrency was trading at around $3 seven years ago, according to data from CoinGecko. Although there was an initial shock, some analysts believe that the crackdown in China will not affect global cryptocurrency prices in the long run. This is due to the fact that companies continue to introduce cryptocurrency services and products. Chainalysis has published a report showing that cryptocurrency transactions in Asia increased by 706% last year, despite successive bans in China. In addition, the CEO of the deVere Group, Nigel Green, estimates that Bitcoin could reach $100,000 by the end of 2021.
“Business activities related to virtual currencies are illicit financial activities,” the People`s Bank of China said, warning that it “seriously endangers the safety of people`s assets.” “While crypto trading is not illegal, we don`t want to waste our time arguing with banks because they obviously think anything to do with crypto is illegal,” the person said. Beijing`s First Intermediate People`s Court said in a ruling that although China bans crypto trading, cryptocurrencies can be protected by law as a type of virtual asset. Some governments that have banned crypto have said that cryptocurrencies are used to funnel money to illicit sources, arguing that the rise of crypto could destabilize their financial systems. While not all governments ban crypto, many are exploring how digital currencies can be regulated, including in the U.S. Gary Gensler, chairman of the Securities and Exchange Commission, has called crypto “the Wild West” and said he wants to push through more regulation for digital currencies. Gensler hired a senior cryptocurrency consultant last week. He Yifan, general manager of Red Date Technology, a company that provides BSN technical support, announced the news to the South China Morning Post, stating that NFTs “have no legal problems in China” as long as they are not linked to cryptocurrencies such as Bitcoin, which are banned in China. However, the notion of cryptocurrencies as securities-type assets has gained momentum elsewhere. India, for example, has taken the position that cryptocurrencies are bad means of exchange, but investors should not be prevented from trading them. They also fear that “mining,” the energy-intensive computational process by which Bitcoin and other tokens are created, is violating global environmental goals. Data from cryptocurrency exchange Bitstamp showed that there was an increase in volume on Bitcoin at the time of the announcement, but soon the volume decreased and prices recovered.
And foreign websites offering such services to Chinese citizens online are also illegal activity, he said. Exchanging legal and virtual currencies, buying or selling virtual currencies (including overseas sales to Chinese residents) and providing information (including pricing and technical support) for virtual currencies are currently illegal. They carry the risk of investigation and prosecution. Under the recent ban, the government hopes to combine offline and online investigations to better identify and investigate cryptocurrency trading activity. The statement makes clear that those involved in “illicit financial activities” are committing a crime and will be prosecuted. While Lesperance says crypto exchanges are banned in China, some local crypto enthusiasts are convinced that the PBoC has never explicitly banned individuals from trading cryptocurrencies. (3) Bitcoin-related activities prohibited by the state are: Token funding trading platforms are not allowed to engage in the barter transaction between legal tender and tokens or “virtual currencies” and cannot buy or sell tokens or as a central counterparty. “Virtual Currency” may not provide services such as price and information brokers for tokens or “Virtual Currency”. Financial institutions and non-bank payment institutions may not, directly or indirectly, provide products or services such as account opening, registration, trading, clearing and settlement for the financing of token issuance and “virtual currency” and must not support tokens and related “virtual currencies”.
The insurance business may include tokens and “virtual currency” as part of civil liability. Regarding the legal nature of Bitcoin in [China`s] current regulatory system, two points need to be highlighted: The Shenzhen Court of International Arbitration concluded in the Share Transfer Agreement dispute that the Bitcoin restitution agreement between individuals does not violate mandatory provisions of laws and regulations and should not be considered invalid. Chinese laws and regulations do not prohibit the private ownership and legal circulation of Bitcoin. Bitcoin can be the object of delivery. Bitcoin is not legal tender and does not prevent it from being legally protected as property. Bitcoin has property attributes, can be dominated and controlled by humans, has economic value, and can bring economic benefits to parties. That is the unanimous intention of the parties and it does not violate the law. The arbitral tribunal shall recognize this. First of all, clarifying Bitcoin`s legal characteristics is a prerequisite for the case. Bitcoin itself is a digital currency, so it can be protected by law as common property.
However, due to its inherent shortcomings, it is difficult to be legal tender. As long as the State has not authorised its use as legal tender, its activities as legal tender are not authorised by national law. The move also hit cryptocurrency and blockchain-related stocks, though they recovered some of those declines in U.S. morning trading. The repeated bans highlight the challenge of closing loopholes and identifying bitcoin-related transactions, though banks and payment companies say they support the effort. In 2019, the President of the People`s Republic of China and General Secretary of the Communist Party of China called on China to adopt blockchain technology, increase the country`s investment, and focus on developing blockchain technologies. The People`s Bank of China is expected to be the first central bank to launch an official, legally sanctioned digital currency — a government-backed digital fiat currency. In the dispute over the purchase contract between Tan Moyuan and Tan, the Court of First Instance held that due to the illegality of the subject matter of the dispute, π the coin itself, transactions concerning the object are not protected by law. Therefore, the legal relationship between Tan Mou and Tan Mouyuan regarding the contract for the sale of “π parts” should be considered invalid and the goods acquired as a result of the contract should be returned to each other. The Court found that the application of the law by the court of first instance was erroneous. The Court of Second Instance stated that: from the “announcement”, although the behavior of citizens trading virtual currency is personal freedom, this behavior is not protected by law in my country, the consequences and risks caused by the transaction should be borne by the investors themselves.
Bitcoin enrichment disputes refer to return disputes between investment platforms and investors due to misallocation of Bitcoins.