China has no Law for Cryptocurrency, Says High Court
A Chinese court stated that there is no law regarding cryptocurrency, an indication that investors would carry out crypto investment at their peril.
No Protection for Chinese Crypto Investors
According to the South China Morning Post on Monday (August 23, 2021), an intermediate court in the city of Jinan revealed that cryptocurrency investment and trading were not covered by the law. The development further enforces crypto’s illegal status in China.
The statement came after the Jinan high court reviewed a case involving bitcoin. Back in 2017, a Chinese resident bought cryptocurrency worth 70,000 yuan ($10,794) following an endorsement by three friends.
However, things turned sour for the investor, after China’s central bank, the People’s Bank of China (PBOC) in 2018 reiterated its warning that financial institutions in the country should cease offering services to cryptocurrency-related accounts.
Consequently, the accounts were closed, but the investors filed a fraud allegation lawsuit. However, the intermediate court in Jinan ruled that there was no law covering bitcoin and other cryptos, meaning that the investor’s claims were not tenable.
Meanwhile, the latest development means that Chinese investors will not get succour from the courts if they face problems with their cryptocurrency investments.
China’s cryptocurrency industry has had to deal with the government’s strong anti-crypto stance for years. According to a report by BTCManager earlier in August, the PBOC said that it was going to increase its surveillance on cryptocurrency trading.
Also in August, the Shenzhen branch of the Chinese central bank cracked down on 11 companies allegedly involved in illegal cryptocurrency trading activities.
Apart from the clampdown on bitcoin trading, Beijing’s negative attitude towards the emerging sector also extends to crypto mining. In May, the Financial Stability and Development Committee of the State Council, chaired by China’s Vice Premier Liu He, called for a crackdown on bitcoin mining and trading.
In June, authorities in Zhundong, Xinjiang, asked bitcoin miners to shut down mining operations. Miners in other regions such as Inner Mongolia, Yunnan, and Sichuan have also faced similar treatment.