As reported earlier, a Chinese Arbitration court declared that bitcoin requires legal protection as property. The declaration by such a court has opened discussions on the legitimacy of cryptocurrency payments in the country. Actually, from the ruling, it is vividly clear that Chinese merchants can now accept payments in cryptocurrency.
In a considerable landmark determination on the ambiguity surrounding cryptocurrencies, the arbitrator was very clear:
“Bitcoin has the nature of a property, which can be owned and controlled by parties, and is able to provide economic values and benefits.”
Furthermore, the arbitrator was categorical that Chinese law neither prohibits the possession of bitcoin nor its transactions among individuals.
The determination that cryptocurrencies can be owned and controlled, and can provide economic values and benefits, has implications for usage. In a tweet by CnLedger, a reliable Chinese news source, merchants can legally accept crypto as a payment method.
“Chinese court confirms Bitcoin is protected by law. Shenzhen Court of International Arbitration ruled a case involving cryptos. Inside the verdict: CN law does not forbid owning & transferring bitcoin, which should be protected by law because of its property nature and economic value.” said the tweet.
Indisputably, the position of the Shenzhen Court of International Arbitration was that Bitcoin is a property. Therefore, it can be owned and transferred without jeopardising the existing financial regulations.
Katherine Wu, a leading cryptocurrency researcher at Messari, analysed the court documents to comprehend the reasoning behind the ruling. Mainly, she was interested in the logic of the judges in declaring bitcoin a property. In a tweet, Wu was categorical that:
“The official account of the Shenzhen International Court of Arbitration released an explanation on a recent share transfer dispute that involved bitcoin, bitcoin cash, and bitcoin diamond & determined that crypto is protected under China’s current property & contract law.”
Essentially, Wu expounded that the decentralised nature of bitcoin provides financial freedom and economic value to the owner. Consequently, it is an asset that can be categorised as property.
“The Party contends that Bitcoin has characteristics of a property (SOV), can be controlled by the owner, and has economic value to the owner. It does not break any laws. This arbitrator agrees,” Said Wu
The court was clear-cut that notwithstanding the legality of bitcoin, the circulation and payment of bitcoin is not illegal. Accordingly, merchants are at liberty to use bitcoins without infringing on existing laws.
“In the arbitrator’s view, whether or not bitcoin is legal, the circulation and the payment of bitcoin is not illegal. Bitcoin does not have the same rights as fiat, but that does not mean that holding or paying with crypto is illegal.” Said Wu.
Recently, Beijing Sci-Tech Report (BSTR), China’s oldest technology publication, announced that it intends to accept Bitcoin payments for annual subscriptions. The usage will start in 2019 with a yearly subscription going for 0.01 BTC, worth around $65. The initiative seeks to promote the use of blockchain technology and the broader usage of cryptocurrencies in China.
Additionally, many hotels in China have adopted the use of cryptocurrencies. Notably, the Ethereum Hotel in China promotes Ethereum and offers merits and discounts to customers paying for their services using Ethereum.