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The Chinese government, which banned cryptocurrencies in 2021, continues to make contradictory decisions. The latest one emerged today. China, which declared war on all cryptocurrencies along with Bitcoin mining during the last bull season, is regulating crypto through Hong Kong while taking opposite steps on the mainland.
China and Cryptocurrencies
A Chinese court has ruled that a Filecoin mining case violates the principles of green development, social and public interests, and therefore, the contract is invalid. Currently, most civil contracts involving cryptocurrencies and mining are not recognized and considered invalid by Chinese courts.
Although there are court decisions that recognize and accept cryptocurrencies as property, the recent move has confused many. Investors in the Chinese region continue to invest through international companies or OTC, but the government’s stance has not changed. The Chinese region, representing one of the largest investor groups, still accommodates active traders. In fact, it was seen in the FTX crash that a significant portion of the affected investors were traders residing in China.
Cryptocurrency Court Decision
The Wuhan City, Wuchang District People’s Court convened on July 7 due to a dispute in a contract. Zhou was going to purchase an IPFS storage server for 179,800 yuan, and this server would be hosted by the company. The company that provided server rental services told Zhou that he would earn Filecoin rewards in an amount greater than his monthly payments. Then, due to the ban on cryptocurrencies, he contacted the company to request a refund of his payment. However, when no compromise was reached, the contract dated July 7, 2021, went to court.
The court stated that the plaintiff applied for this rental service to obtain Filecoin and that mining is banned in the country.
“Such mining activities do not help the country achieve its carbon emission targets. Issues such as the risk of asset loss, speculation, and potential failure harm public interests. It has been decided that the contract in question is invalid because the transactions covered by the contract violate the principle of green development, harm public interest, and do not comply with relevant administrative regulations and regulatory requirements related to industrial restructuring.”
On September 15, many institutions including the People’s Bank of China published a document titled “Prevention of Deception Risks in Virtual Currency Transactions and Dealing with These Risks,” advising citizens to stay away from crypto.
