Beijing commission clarifies China’s position on Bitcoin
The Chinese Government still allows Bitcoin-related activities, because the cryptocurrency is defined as a virtual commodity
The Beijing Arbitration Commission (BAC) has clarified that China has not imposed a total ban on Bitcoin.
While the country is known for having one of the world’s strictest jurisdictions for cryptocurrency trading, its prohibition of Bitcoin is more nuanced than it seems.
In the BAC’s report, the organisation clarified that the country prohibits token funding and trading platforms from engaging in exchanges between the legal tender and virtual currency or tokens.
The commission explains that while the law bans cryptocurrency as money, it does recognise it as a virtual commodity.
The BAC also added that the country’s current laws are not specific enough to regulate Bitcoin as virtual property. It only states that the protection of virtual property must be stipulated by the law; meanwhile, the specific protection measures of these virtual properties are entrusted to other laws.
Since China currently does not have any laws on Bitcoin, it cannot yet be recognised as virtual property.
“In summary, the state does not prohibit Bitcoin’s activities as virtual commodities, except for the activities that Bitcoin is engaged in as legal tender,” the report concludes.
Furthermore, the BAC also added that since Bitcoin is not recognized as money in China, because the government has not approved Bitcoin as legal tender, and since it cannot be used as an alternative to the legal tender or fiat currency, it should not be associated with an illegal transaction.
China has had a stern stance on cryptocurrencies following the imposition of regulations on local crypto exchanges last 2017. The regulations were so restrictive that Binance, the world’s largest crypto exchange, had to leave the country.
The company was originally established in China.
While the government has certainly been implementing stricter regulations on Bitcoin, it has not banned the cryptocurrency. Chinese authorities reassured citizens last November 2019 that mining Bitcoin is not an illegal activity in the country.
The government has made it clear that they are working more towards the integration of blockchain instead of cryptocurrencies. One example of their research and development in the technology involves the national Blockchain Service Network, a blockchain hosting platform for small to medium enterprises and individuals.
The central bank of China has also been making steady progress with its central bank digital currency (CBDC), having piloted the project in four cities and collaborating with several high profile companies for testing.