A Beijing-based Chinese Intermediate Court recently upheld a lower court ruling that determined that cryptocurrency is virtual property protected by law. The court clarified that regulations issued by the Bank of China and others only prohibit the circulation of virtual currency.
“Funding behavior prohibited by law”
An intermediate court in China recently upheld a lower court’s decision that designated Litecoin as virtual property protected under the country’s laws, according to a report. The court clarified that the relevant administrative regulations of the country only prohibit the circulation of virtual currency or its use as currency.
The Beijing-based court’s decision follows an appeal by Chinese resident Ding Hao who wanted it to reverse the lower court’s decision in a case in which he is accused of failing to return 33,000 Litecoins (SLD) under an agreement with Zhai Wenjie.
According to a document issued by the courton December 5, 2014, Hao received 50,000 SLD of Wenjie and was forced to repay in four instalments. The last repayment of 8,334 SLD was supposed to have been paid by October 15, 2015, according to the court document.
However, citing regulations issued by the Bank of China and other relevant departments that state that virtual currency is not protected by law, Hao argued that the lower court erred when ruling in favor of Wenjie. Additionally, Hao attempted to portray his loan deal with Wenjie as “funding behavior prohibited by law” and therefore should not be protected by law.
‘SLD is a network
Nevertheless, in rejecting Hao’s claims, the Chinese Intermediate Court insisted that the regulations cited by the defendant are only “regulatory notices” and that these in no way diminish its obligations.
Regarding cryptocurrency, the court determined that even if SLD is a “network currency”, it still lacks the key properties of a currency such as “legal indemnification and coercion”. Cryptocurrency, however, has the characteristics of virtual property and according to the court, Wenjie is entitled to the rights that arise from owning such property.
“The court held that Litecoin has the properties of virtual property and virtual goods… Zhai Wenjie can enjoy the corresponding property rights and the basis for claiming the property right,” the court document said.
Therefore, the intermediate court ruled that the lower court’s decision would stand and that Hao should return the remaining 33,000. SLD in Wenjie. Bitcoin.com News reported a similar story from china involving bitcoin earlier this year, in May.
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