Keywords: virtual currency, legal property, cryptocurrency regulation, blockchain assets, Chinese law, digital assets, financial protection
The increasing prominence of virtual currency in facilitating illegal activities has sparked global concern, with cryptocurrency-related crimes surging from $8.4 billion in 2020 to $20.6 billion in 2022. This article examines the legal status of virtual currencies in China and their protection under current laws.
1. Legal Status of Virtual Currency in Criminal Law
Three primary perspectives exist regarding the legal classification of virtual currency:
Perspective 1: Electronic Data Without Legal Protection
Some argue virtual currencies merely constitute electronic data stored in computer systems, often used for illegal transactions, and thus shouldn't be recognized as legal property.
Perspective 2: Virtual Goods With Limited Protection
Others classify virtual currencies as virtual commodities with economic value but believe current policies restrict their circulation, warranting limited legal protection.
Perspective 3: Fully Protected Legal Property (Supported View)
This perspective maintains virtual currencies qualify as legal property under Chinese law when not used for illegal purposes. Key arguments include:
Economic Attributes of Virtual Currency
Practical Utility: Unlike fiat currency, virtual currencies serve functional purposes:
- Settlement medium in blockchain applications
- Digital certificates for events or virtual property
Objective Exchange Value: Despite China not recognizing cryptocurrency as legal tender, its value persists through:
- Global acceptance in 73 countries
- Over 30,000 cryptocurrency ATMs worldwide
- Stablecoins pegged to fiat currencies
- Protected Against Property Crimes: Theft of virtual currency should be prosecuted as property offenses, not just computer crimes.
Current Legal Framework
- Regulatory Classification: The 2013 Five Department Notice classified Bitcoin as a "specific virtual commodity."
- Civil Code Recognition: Article 127 acknowledges protection for network virtual property.
- Transaction Policies: The 2021 Ten Department Notice prohibits specific financial activities but doesn't ban all virtual currency transactions.
2. Handling Virtual Currency in Criminal Cases
Courts should balance individual property rights with public interest when adjudicating cryptocurrency-related cases:
Cases Without Victim Transactions (e.g., Theft)
- Defendants must compensate victims for losses
- Untransferred currency should be returned
Valuation methods include:
- Resale prices
- Purchase prices
- Recent comparable transaction values
Cases Involving Victim Transactions (e.g., Fraud)
- Victims participating in questionable transactions may share responsibility
Outcomes may include:
- Partial or full defendant restitution
- Confiscation of illegal proceeds
- Conversion of seized currency through approved channels
FAQ Section
Q: Is cryptocurrency legal in China?
A: While not recognized as legal tender, virtual currencies aren't classified as illegal items and remain protected as property under current laws.
Q: Can I recover stolen cryptocurrency in China?
A: Yes, courts may order restitution for theft victims, though valuation methods vary based on available evidence.
Q: What happens to cryptocurrency seized in criminal cases?
A: Depending on circumstances, authorities may return it to victims, order compensation, or convert it through approved channels with proceeds going to the state.
Q: Are all cryptocurrency transactions illegal in China?
A: No, the law specifically targets certain financial activities like exchange services and ICOs, not all individual transactions.
👉 Understanding global crypto regulations
The legal landscape continues evolving, but current Chinese law maintains a balanced approach—protecting legitimate cryptocurrency holdings while preventing illegal financial activities. As blockchain technology advances, policymakers worldwide 👉 track regulatory developments to address both innovation and risk management concerns.