China takes cryptocurrency as a virtual commodity but not as money, and so activities related to Bitcoin are permitted in the country. But there is a perception that China has restricted all activities related to cryptocurrency.
According to the latest report by the Beijing Arbitration Commission (BAC) published on July 30, not all things related to cryptocurrency are prohibited in the country. BAC has tried to unveil clear laws and regulations on Bitcoin enforced by the government.
Restrictions on Bitcoin
The token funding is strictly prohibited in the country, claims BAC. The commission has also clarified that trading platforms are not allowed to exchange legal tender with virtual currency.
Law on cryptocurrency accepts it as a virtual commodity but does not consider it as money. The report reads:
“The “General Principles of Civil Law” do not make specific provisions on the extension and connotation of virtual property, but only stipulates that the protection of virtual property must be stipulated by law, and the specific protection measures of virtual property are entrusted to other laws. As the country currently has no laws on Bitcoin, it cannot be recognized as a virtual property.”
The state only restricts those activities that consider Bitcoin as a legal tender. “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 added.
Bitcoin as Virtual Commodity but not as a Currency
The only objection of the government is that Bitcoin should not be used as a currency. Not only China, but many countries have also passed laws to prohibit Bitcoin as a currency. BAC stated:
“The prohibited transactions include those when Bitcoin is used as a currency. If Bitcoin does not engage in activities as a currency, it is not a transaction prohibited by the state. For example, in the equity transfer contract dispute decided by the Shenzhen International Arbitration Court, the two parties agreed on the return of Bitcoin. Bitcoin is only used as a general property. Therefore, the transaction does not violate relevant national regulations and should be valid.”
China is considered as one of those countries which put strict cryptocurrency regulation measures. Due to tough laws for Bitcoin, cryptocurrency exchange Binance had to move out of China.