Are Virtual Currencies Considered Legal Property in China?

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The value of virtual currencies, particularly Bitcoin, has experienced significant volatility in recent years. Since 2024, prices surged close to $74,000 before sharply declining. Despite China's strict regulatory stance on virtual currencies like Bitcoin (BTC), Ethereum (ETH), and Tether (USDT), public interest in investing remains strong. This ongoing fascination has led to a surge in civil and commercial disputes involving digital assets. This article explores whether virtual currencies are recognized as legal property under Chinese law and examines the judicial treatment of related disputes.

Is Virtual Currency Recognized as Legal Property in China?

There is ongoing debate about the legal nature of virtual currencies. Some argue they lack the characteristics of traditional property and therefore aren't protected under civil law. Others, including this analysis, assert that virtual currencies do possess property attributes and should be legally safeguarded. Below are key reasons supporting this view.

1. No Explicit Legal Denial of Property Status

Since 2013, China has issued several policies regulating virtual currencies, including:

While these documents tighten oversight and prohibit financial institutions from facilitating crypto transactions, none explicitly declare virtual currencies illegal or deny their property value. Notably, the 2013 People’s Bank of China notice refers to Bitcoin as a “specific type of virtual commodity,” indirectly acknowledging its economic value.

Furthermore, the 2021 joint notice states:

“Civil legal acts involving investment in virtual currencies that violate public order and good customs are invalid.”

This implies that the act of investing itself isn’t automatically illegal—only when it disrupts social or financial order does it become unenforceable.

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2. Judicial Recognition of Virtual Property

Chinese courts have increasingly treated virtual currencies as protectable assets.

In Li v. Yan [(2019) Hu 01 Min Zhong No. 13689], the Shanghai First Intermediate Court ruled that Bitcoin exhibits characteristics of value, scarcity, and controllability, meeting the criteria for virtual property. The court emphasized that while Bitcoin isn’t legal tender, its status as a “virtual commodity” allows it to be legally owned and protected.

Similarly, in a theft case from Jiangxi Province, the local court held that illegally obtaining someone else’s Bitcoin constitutes theft, reinforcing the idea that digital assets can be the subject of property crimes—even if not officially classified as currency.

3. Criminal Prosecutions Affirm Property Value

Multiple criminal rulings have classified the unauthorized acquisition of cryptocurrencies as property offenses, such as theft or fraud. For example:

These decisions signal a practical judicial acknowledgment: if something can be stolen, it must have value worth protecting.

Civil Dispute Rulings and Legal Risks

Most crypto-related civil cases involve contracts—lending, investment, mining equipment sales, or asset management. Judicial attitudes vary significantly by region and contract type.

(1) Lending Contracts Involving Virtual Currencies

Some Courts Reject Enforcement

Certain courts refuse to enforce loans denominated in crypto, citing public policy concerns.

In Xu v. Lin, the Changzhou Intermediate Court held that Bitcoin lending violates financial regulations and lacks enforceability because:

Similarly, in Xue v. Jiang, a Shenzhen court ruled that using USDT as loan collateral is illegal, calling it an “illegal debt” that disrupts financial order.

Other Courts Recognize Validity

By contrast, Beijing courts have taken a more progressive approach.

In Chang v. Xiong, the Haidian District Court found that sending 500 ETH to a designated wallet constituted valid loan disbursement. The court reasoned:

Even after stricter 2021 regulations, Beijing’s First Intermediate Court upheld a Litecoin return order in Ding v. Zhai, affirming that:

“Virtual property is protected under civil law; borrowing it creates a duty to return.”

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(2) Mining Equipment Sales Contracts

Courts consistently invalidate contracts tied to cryptocurrency mining due to environmental and policy concerns.

In Sichuan Co. v. Guangzhou Co., the Guangzhou Intermediate Court ruled that purchasing mining rigs for Bitcoin production violates public order because:

This view was echoed by the Sichuan Provincial Court in Hu v. Wang, later cited by the Supreme People’s Court as a top commercial case of 2022, signaling national consensus against mining-related commerce.

(3) Investment and Asset Management Agreements

Contracts involving crypto-based wealth management are typically voided for violating financial regulations.

In Wei v. Zhang, Guangzhou Internet Court dismissed claims over lost XIN coins, stating:

“Investing in unregulated foreign tokens harms public interest and encourages speculative risk.”

Likewise, in Li v. Wu, Xiamen’s court held that委托理财 (entrusted investment) in banned digital assets constitutes illegal financial activity, with losses borne entirely by investors.

(4) Development of Crypto Platforms

An important distinction exists between developing a crypto platform and operating one.

In a landmark ruling [(2021) Zui Gao Fa Zhi Min Zhong No. 494], the Supreme Court held that software development alone does not violate regulations, as long as it doesn’t facilitate trading or issuance. Only actual operation of exchanges falls under prohibited activities per regulatory notices.

Challenges in Judicial Remedies

Despite recognizing virtual assets’ value, Chinese courts face practical hurdles in enforcing remedies.

1. Difficulty in Returning Cryptocurrency

Many courts reject claims for direct return, citing:

Even when ordered to return coins, enforcement fails if the defendant refuses to disclose private keys—making blockchain recovery nearly impossible.

2. Resistance to Fiat Compensation

In China’s first overturned crypto arbitration award [(2018) Yue 03 Min Te No. 719], Shenzhen’s court canceled a ruling requiring dollar compensation for Bitcoin loss, stating:

“Valuing Bitcoin in USD implies recognition of its exchange function—contrary to national policy.”

The Supreme Court later designated this case as Guiding Case No. 199, reinforcing that courts must not facilitate crypto-fiat conversion.

3. Pre-Agreed Valuation Offers a Path Forward

However, if parties predefine a fiat value in writing, courts may accept compensation based on mutual agreement.

In Yan v. Li, the Shanghai court accepted an agreed rate of 42,206.75 RMB per Bitcoin, allowing damages to be awarded without referencing external price data.

This suggests a viable strategy: contractually fix crypto values upfront to enable future enforcement.

Will EU’s MiCA Influence China’s Approach?

The EU’s Markets in Crypto-Assets Regulation (MiCA), set for full implementation in 2025, establishes a comprehensive legal framework for crypto assets across Europe. It recognizes stablecoins like USDT and USDC as regulated instruments and licenses service providers continent-wide.

If MiCA proves successful in enhancing market integrity and investor protection, it could pressure China to reconsider its hardline stance—especially regarding:

While full legalization remains unlikely soon, increased global legitimacy may lead Chinese courts to adopt more consistent and predictable approaches to virtual asset disputes.

Frequently Asked Questions (FAQ)

Q: Can I legally own Bitcoin in China?
A: Yes. While trading and financial services are banned, private ownership is not illegal. Individuals may hold crypto in overseas wallets.

Q: Can I sue someone for stealing my cryptocurrency?
A: Yes. Courts have recognized theft of digital assets as criminal offenses, affirming their property-like nature.

Q: Are crypto loan agreements enforceable?
A: It depends on jurisdiction. Beijing courts are more favorable; others may void such contracts as violating public order.

Q: Can I get money back if I lose crypto in a dispute?
A: Direct return is difficult. However, if both parties agree on a fiat value beforehand, courts may award compensation.

Q: Does China recognize foreign crypto regulations like MiCA?
A: Not officially—but growing global standards may influence future judicial interpretations and policy adjustments.

Q: Is mining or buying mining equipment illegal?
A: Yes. Both activities were banned in 2021 due to energy consumption concerns and are considered contrary to public interest.

👉 Stay ahead with insights into how international frameworks like MiCA are shaping digital finance.

Core Keywords:

This article provides a comprehensive overview of how virtual currencies are treated under Chinese civil law—highlighting evolving judicial trends, regional disparities, and strategic considerations for investors navigating this complex landscape.