China’s relationship with cryptocurrency has long been viewed as strict and unwelcoming. However, recent legal interpretations and judicial precedents suggest a more nuanced position: while the use of digital assets as currency is prohibited, holding and transacting in cryptocurrencies like Bitcoin may still be lawful under certain conditions.
According to rulings from Chinese arbitration bodies and courts, Bitcoin is recognized as a form of virtual property with economic value—even if it is not considered legal tender. This distinction lies at the heart of China’s evolving regulatory framework for digital assets.
The 2017 Crackdown and Its Aftermath
In 2017, China banned domestic Bitcoin trading platforms and initial coin offerings (ICOs), effectively shutting down all onshore cryptocurrency exchanges. This move was aimed at curbing financial risks and speculative behavior. Despite the ban, demand for crypto trading persisted. Traders turned to offshore exchanges to continue buying and selling digital assets, highlighting the difficulty of fully controlling decentralized financial activities.
One of the most notable consequences of this regulatory shift was the departure of Binance, now one of the world’s largest crypto exchanges, from mainland China. While the government enforced strict prohibitions on financial institutions providing services to crypto-related businesses, it did not explicitly criminalize individual ownership of digital currencies.
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Judicial Recognition of Bitcoin as Virtual Property
A pivotal moment came in July 2019, when the Hangzhou Internet Court held a public hearing on a property dispute involving Bitcoin. The court ruled that Bitcoin qualifies as a virtual asset with monetary value, setting an important legal precedent.
Pang Lipeng, one of the lawyers involved in the case, emphasized that this was the first time Chinese judiciary formally acknowledged Bitcoin as a scarce, transferable, and valuable asset protected under the law. Although the People's Bank of China (PBOC) reiterated that Bitcoin is not legal tender, it acknowledged that such digital assets can be treated as virtual commodities.
The Beijing Arbitration Commission reinforced this view by stating that while using cryptocurrencies as money is banned, activities involving them as virtual goods are not automatically illegal. For instance, in a share transfer contract dispute adjudicated by the Shenzhen International Arbitration Court, the parties agreed to return Bitcoin as part of the settlement. The commission concluded that since Bitcoin was used merely as a form of property—not currency—the transaction did not violate national prohibitions and should be deemed valid.
Legal Ambiguity and the Need for Clarity
Despite these developments, legal uncertainty remains. Under China’s Property Law, assets must be clearly defined as “objects” to qualify for property rights protection. Since existing legislation does not explicitly classify Bitcoin as such, it cannot currently be recognized as property under formal property law principles.
As the Beijing Arbitration Commission noted, “Due to the principle of statutory property rights, without clear legal provisions, Bitcoin cannot be regarded as property under the Property Law.” This creates a gray area: while courts may protect crypto holdings in civil disputes, there is no comprehensive statutory framework supporting those rights.
Nevertheless, the practical implication is clear—individuals can legally own and transfer Bitcoin as long as it is not used to replace fiat currency in everyday transactions.
Civil Code Advances Digital Asset Protection
A significant step forward came with the passage of China’s new Civil Code, which took effect on January 1, 2021. The code strengthens protections for personal property rights, including digital and internet-based assets.
Professor Yang Lixin from Renmin University explained that under Article 127 of the Civil Code, “When a natural person dies, their estate includes any lawful personal property they leave behind.” This definition explicitly encompasses digital assets such as cryptocurrencies and online accounts.
This means Chinese citizens can now legally pass down their Bitcoin and other virtual holdings to heirs—a powerful signal that digital wealth is increasingly being integrated into mainstream legal frameworks.
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China’s Strategic Focus: Blockchain Over Cryptocurrency
While wary of decentralized currencies, China has actively promoted blockchain technology—the underlying infrastructure of cryptocurrencies—as a national priority.
Earlier this year, the Chinese government released its first white paper on blockchain applications in public services. According to the report published in Beijing, 140 government service applications have already been deployed on blockchain networks. These fall into three main categories:
- Data sharing and exchange
- Cross-agency business coordination
- Storage and verification of electronic certificates and licenses
Blockchain has already been implemented in real estate registration systems across multiple agencies, including urban planning departments, housing authorities, tax bureaus, public security bureaus, market regulators, civil affairs offices, and financial regulators. By storing documents on-chain, the system enhances data integrity, trustworthiness, and verification speed.
This strategic embrace of blockchain—while maintaining strict control over private cryptocurrencies—reflects Beijing’s broader vision: harnessing distributed ledger technology for efficiency and transparency without compromising monetary sovereignty.
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Frequently Asked Questions (FAQ)
Q: Is Bitcoin legal in China?
A: Yes—but with restrictions. Owning and transferring Bitcoin is not illegal if it's treated as a virtual commodity rather than currency. Using it as payment or for financial speculation is prohibited.
Q: Can I inherit cryptocurrency in China?
A: Yes. Since the implementation of the Civil Code in 2021, digital assets like Bitcoin are recognized as part of an individual’s lawful estate and can be passed on to heirs.
Q: Why does China support blockchain but ban cryptocurrency?
A: China sees blockchain as a transformative tool for improving efficiency in government and industry. However, it opposes private cryptocurrencies due to concerns over capital flight, financial stability, and loss of control over monetary policy.
Q: Are crypto exchanges allowed in China?
A: No. All domestic cryptocurrency exchanges were shut down in 2017. Chinese residents are also discouraged from using offshore platforms, though enforcement varies.
Q: Does China have its own digital currency?
A: Yes. The People’s Bank of China has developed the Digital Yuan (e-CNY), a central bank digital currency (CBDC) designed to modernize payments while maintaining state oversight.
Q: Can businesses accept Bitcoin in China?
A: No. Any transaction using Bitcoin or other cryptocurrencies as a medium of exchange violates Chinese regulations and may result in penalties.
Core Keywords
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This evolving landscape demonstrates that while China maintains tight control over monetary innovation, it continues to refine its approach to digital assets—balancing innovation, legal protection, and state authority.