A Chinese intermediate court in Beijing recently upheld a lower court ruling that cryptocurrency is a legally protected virtual asset. The court explained that regulations issued by the Bank of China and others only prohibit the transfer of virtual currency.
‘Money laundering is prohibited by law’
An intermediate court in China recently upheld a lower court’s ruling that Litecoin is a virtual asset protected by the country’s laws, according to a report. The court explained that the country’s relevant administrative regulations only prohibit the circulation of virtual currency or its use as currency.
The Beijing-based court’s ruling follows an appeal by Chinese businessman Ding Hao to overturn a lower court’s ruling that he failed to return 33,000 litecoin (LTC) in a deal with Zhai Wenji.
According to the documents released by the court, on December 5, 2014, Hao received 50,000 LTC from Wenji and was obliged to pay this in four installments. The last payment of 8,334 LTC was due on October 15, 2015, court documents show.
But Hao argued that the lower court erred in ruling in favor of Wenji, citing regulations issued by the Bank of China and other relevant departments that state virtual currencies are not protected by law. Hao also tried to dismiss the loan agreement with Wenji as “prohibited financial conduct” and therefore should not be protected by law.
‘LTC is a network’
However, the Chinese Intermediate Court rejected Hao’s claim, stating that the regulations cited by the defendant were merely “regulatory comments” and did not in any way reduce his obligations.
Regarding cryptocurrency, the court ruled that while LTC is a “network currency,” it still lacks the key features of a currency such as “legal settlement and enforcement.” However, cryptocurrency has the characteristics of virtual property and according to the court, Wenji is entitled to the rights that come from owning such property.
“The court ruled that litecoin has the characteristics of virtual property and virtual goods… Zhai Wenjie can enjoy related property rights and property ownership claims,” the court document says.
Thus, the Intermediate Court ruled that the lower court’s decision should be upheld and that Hao should return the outstanding 33,000 LTC to Wenji. Bitcoin.com News reported a similar story from China earlier this year in May involving Bitcoin.
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