Case Overview
On May 5, the Shanghai High People's Court ("Shanghai High Court") published a landmark case analysis via its official WeChat account "Pujiang Tianping," clarifying Bitcoin's legal status as virtual property under Chinese law.
Key Takeaways
- Legal Status: Bitcoin recognized as virtual property with economic value, subject to property rights laws.
- Enforcement: Courts apply property law frameworks for Bitcoin-related disputes and强制执行 (enforcement).
- Judicial Consensus: Multiple precedents affirm Bitcoin's scarcity, utility, and transferability as virtual assets.
Case Details & Execution Process
Background
In October 2020, plaintiff Cheng某 sued defendant Shi某某 for failing to return one Bitcoin per a prior agreement. The Baoshan District Court ruled in February 2021 that Shi must return the Bitcoin.
Enforcement Challenges
- Asset Tracing: No Bitcoin holdings found under Shi’s name via national court查控系统 (asset-tracking system).
- Platform Cooperation: Target exchange lacked verifiable contact details in China.
- Third-Party Transfer: Bitcoin was transferred to an untraceable third party, prompting a police report.
Resolution
- Mutual Agreement: Parties negotiated折价赔偿 (discounted compensation) at Bitcoin’s original purchase price (¥84,000).
- Court Role: Facilitated和解 (settlement) under审执兼顾 (trial-enforcement coordination) principles.
Legal Analysis by Shanghai High Court
Bitcoin’s Legal Identity
- Virtual Commodity: Cited in China’s 2013 regulatory notice but lacks formal legal definition.
Judicial Precedents: Courts consistently treat Bitcoin as虚拟财产 (virtual property) due to:
- Value: Generated via cost-intensive "mining."
- Scarcity: Capped at 21 million coins.
- Transferability: Held/exchanged as an asset.
Legislative Gap
While China’s Civil Code (Article 127) acknowledges虚拟财产 protection, specific regulations remain undeveloped. Courts default to property law for disputes.
Key Quote: "Judicial pragmatism focuses on Bitcoin’s economic attributes, not theoretical debates." — Shanghai High Court
FAQs
1. Is Bitcoin legally protected in China?
Yes, as virtual property under property laws, though trading restrictions apply.
2. How are Bitcoin disputes resolved if the asset is unrecoverable?
Courts may enforce monetary compensation based on market value or agreed terms.
3. Why did the court approve折价赔偿?
Due to defendant’s inability to return the Bitcoin and plaintiff’s acceptance of公平补偿 (fair compensation).
👉 Explore Bitcoin’s global legal status
Conclusion
This case sets a precedent for Bitcoin’s treatment in Chinese courts, emphasizing pragmatic enforcement and alignment with财产权 (property rights) principles. Stakeholders should note:
- Document Transactions: Ensure clear proof of ownership.
- Legal Counsel: Consult experts for涉币 (crypto-related) disputes.
Adapted from 21st Century Business Herald.
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