Despite the nation’s ban on cryptocurrency transactions, the Supreme People’s Court of China has determined that virtual assets can be used legally to settle essential relational debts, such as exchange and labor. The choice was made earlier this year during a meeting. The usage of cryptocurrency would only be regarded as legitimate if both parties agreed to it, it is crucial to remember that. This judgment, which was rendered in January 2023, is noteworthy because it defines the legitimacy of using cryptocurrencies to pay off debt in China.
Amidst the ongoing uncertainty and debates, it is fascinating to see this development emerge. In recent months, investor interest in cryptocurrencies has skyrocketed, and China has ranked among the top 10 nations in the global crypto adoption index. If there are legal limitations preventing the completion of a cryptocurrency transaction, the court will consider the actual value of the agreed-upon amount of cryptocurrencies at the time the contract was signed when determining compensation. However, it should be noted that using cryptocurrencies as payment for fiat money or physical items under the guise of a contract is still prohibited.
The standpoint of the Chinese government on cryptocurrencies highlights that digital currencies such as Bitcoin, Ether, and Tether are not subject to the same legal regulations as fiat currency. This stance aligns with their overall view on the matter. However, despite this, Beijing is endorsing Hong Kong’s initiative to build a crypto center beyond the mainland, and state-owned financial institutions in China are providing banking support to crypto firms operating locally.
