Is Trading Bitcoin Illegal?

Cryptocurrencies, such as Bitcoin and Tether, have gained immense popularity and intrigue in recent years. However, navigating their legal landscape can be a complex endeavor, particularly in a country like China. I will provide a summary of the current laws and policies concerning cryptocurrency, with a focus on its classification as a virtual commodity and the prohibition of certain financial activities.

First and foremost, it is important to understand that cryptocurrency is deemed a virtual commodity in China, rather than being recognized as legal tender. The government, in 2013, clarified that Bitcoin, for instance, falls under the category of a specific virtual commodity. As such, it lacks the legal status of currency and should not be used as a medium of exchange. This classification extends to other cryptocurrencies that share similar characteristics. Furthermore, the Civil Code of China acknowledges the protection of virtual property, including virtual commodities, within its provisions. Consequently, cryptocurrencies like Bitcoin and Tether are recognized as virtual commodities rather than illegal items under current regulations.

Moving on, while cryptocurrencies are classified as virtual commodities, certain financial activities related to them are strictly prohibited. The “2021 Ten Departments Notice,” a joint effort by regulatory bodies including the People’s Bank of China, aims to prevent and address risks associated with cryptocurrency trading speculation. This notice explicitly prohibits activities such as the unauthorized public issuance of securities, illegal operation of futures business, and illegal fundraising. However, there exists a debate regarding whether all cryptocurrency trading activities are considered illegal financial activities or if only specific activities fall under this classification.

Within the realm of judicial interpretation, differing viewpoints have emerged. Some argue that all cryptocurrency trading activities are deemed illegal financial activities, while others contend that only activities involving specific violations are prohibited. Additionally, it is crucial to recognize that the term “business” refers to professional work, and occasional buying and selling transactions may not necessarily be classified as business activities. Therefore, it becomes imperative to assess individual behaviors on a case-by-case basis to determine whether they constitute prohibited illegal financial activities.

Furthermore, it is worth noting that in civil trial practice, while certain cryptocurrency-related acts may be deemed invalid due to their violation of public order and good customs, this does not undermine the legitimate property attributes of cryptocurrency itself. Through careful analysis of selected civil judgments, it becomes evident that the courts do not transfer cryptocurrency or transaction consideration to administrative departments, nor do they confiscate such assets. Instead, their focus lies primarily on declaring civil acts related to cryptocurrency as invalid without challenging the property rights and ownership of the currency. This approach aligns with the spirit of the “2021 Ten Departments Notice” and reinforces the recognition of property rights associated with cryptocurrencies.

In conclusion, cryptocurrency in China is classified as a virtual commodity, separate from legal tender. While certain financial activities connected to cryptocurrency are prohibited, the interpretation and application of these regulations may vary. It is crucial to consider individual behaviors and seek legal advice to determine whether they fall within the scope of prohibited illegal financial activities. Despite the disapproval of certain cryptocurrency-related acts in civil trial practice, the property rights and ownership of cryptocurrencies are generally recognized.