“China Lifts Bitcoin Ban” Deemed Fake News – What Has Really Been Decided?
On the contrary to what has been reported by several news outlets, China has not lifted its Bitcoin ban. A Chinese court ruling declared that Bitcoin is considered property, but not currency. The court ruling is seen as a positive signal for crypto adoption in China, but it does not significantly change the status quo. Crypto trading and ICOs remain prohibited.
Several news outlets have reported that Chinese authorities have lifted their Bitcoin ban. “Individuals and businesses can own and trade cryptocurrencies legally,” claimed a BTCNN news headline.
At the end of 2017, the Chinese government banned Bitcoin and cryptocurrency trading as a whole. The two popular Chinese crypto exchanges BTC China and VIA BTC were shut down, resulting in a Bitcoin price drop of almost 20%.
Mining rigs all over China were shut down as well. Considering that China housed some of the biggest Bitcoin mining rigs worldwide, this had a significant impact on the Bitcoin market.
The recent news that a Chinese court has allegedly lifted the Bitcoin ban has therefore been met with euphoria.
Bitcoin is considered property, but crypto trading, crypto events, and ICOs remain prohibited
So, what has been decided in China?
The news was based on this ruling of the Shenzhen Court of International Arbitration (SCIA), from 25th October, 2018:
“Although Bitcoin may not be legal currency, that does not prevent it from being protected by law as a property. The Party contends that Bitcoin has characteristics of a property (SOV) that can be controlled by the owner; it has economic value and can bring economic benefits to the owner. This does not break any laws. This arbitrator agrees.”
Put simply, the court acknowledged that Bitcoin is considered property, but not currency.
The court also accepted that Bitcoin can be used as a means of payment.
“Bitcoin does not have the same rights as fiat, but that does not mean that holding or paying with crypto is illegal,” says Katherine Wu, a crypto researcher at Messari.
However, the interpretation that the court has lifted the government’s Bitcoin ban is way off. The court has only stated that merchants are allowed to accept cryptocurrencies. However, trading cryptos, crypto exchanges, crypto events, ICOs and any form of OTC investments in crypto assets remain prohibited.
The legal status of Bitcoin in China has not significantly changed with this court ruling. It seems that the news headlines aimed at manufacturing a hype around the asset class which has recently been stagnant and struggling to re-gain momentum.
Court ruling sends a positive signal for Sino-Crypto Adoption
Although the court ruling does not affect China’s Bitcoin ban, it still gives hope to the blockchain sector. It shows that China’s attitude towards cryptocurrencies is not as negative as often stated.
In fact, the Chinese crypto space has seen some major events in 2018. In September, the Ethereum Hotel opened its operations in Sichuan Province. The hotel accepts Ethereum as a payment method.
In October, Beijing Sci-tech Report (BSTR), China’s oldest tech publication, announced that it will accept Bitcoin as a payment method for its subscriptions from 2019 onwards.
The Chinese government has also announced a cooperation with a New York-based blockchain developer. The goal is to develop blockchain-based apps that can be used within the region.
Katherine Wu also confirms that the Chinese government does not per se have a problem with crypto currencies. The Bitcoin ban in 2017 was a move to prevent further Yuan devaluation and capital flight.
Hence, there is hope for blockchain in China. Even though the court ruling from October 25th has been massively overhyped, it is still a step in the right direction. A small step, but considering the size of the Chinese market, every small step in the right direction could become the start of something amazing.