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Chinese court approves cryptocurrency trading

15-Sep-2022 By: Simran Mishra
Chinese court approv

Despite the country's ban on digital asset services, 

a Chinese court has ruled that residents can still trade cryptocurrencies. 

Notably, China already prohibits cryptocurrency trading, claiming a risk to financial sector stability.

The Beijing Number One Intermediate People's Court ruled that interested investors can only trade cryptocurrency. However, it should be treated as a virtual asset rather than a currency.

The ruling was made in a case involving a crypto loan in Litecoin (LTC) with a promise of paying interest in digital currency. Based on the facts of case, Zhai Wenjie loaned his colleague Ding Hao 50,000 Litecoin in 2015. According to Zhai Wenjie, Ding Hao pledged to pay 1,000 Litecoins in interest each month, which the defendant denied.

Litecoin currency status

Despite acknowledging the current Chinese restriction on cryptocurrency trading, the presiding judge stated that Litecoin could not be treated as a currency. According to the court, cryptocurrency is not issued by a monetary institution and lacks legal and financial support.

“According to current administrative regulations and cases, our country simply denies virtual currency's monetary properties and prohibits its circulation as currency. However, the virtual currency itself is a virtual property protected by law,” the court ruled.

Interestingly, despite the country's current restriction on Bitcoin (BTC), the court evaluated Litecoin, adding that such assets are governed by legislation in the country.

The judge emphasized a lack of legislation forbidding the view of Litecoin as an illicit asset in the case. As a result, the judge found in favor of the plaintiff, finding that the defendant had borrowed a cryptocurrency and ordering him to refund Litecoin.

China’s stand on cryptocurrencies 

The ruling is similar to a recent decision by a Chaoyang court, which directed enterprises not to pay salaries in Tether (USDT) owing to the restriction on the circulation of digital assets.

It is worth mentioning that different Chinese regional courts have issued varying judgments on digital asset trading and handling. For example, as CoinGabbar reported in May, the Shanghai High People's Court declared that Bitcoin has a "certain economic worth" and is thus protected by Chinese law.

Interestingly, despite the ban on crypto services, fresh data shows that more Chinese citizens are still trading in different assets. As reported by CoinGabbar, China is now the ninth most popular cryptocurrency in the world in terms of crypto adoption.

Read also: LITECOIN PRICE ANALYSIS : LTC is under intense selling pressure. as the cryptocurrency market is in the red

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