China’s Supreme Court Recognizes Cryptocurrency as Legal Tender for Debt Settlement

China's Supreme Court recently released guidelines recognizing the legal use of cryptocurrencies in settling debts, provided both parties agree to the terms.

China’s Supreme Court has recently released guidelines regarding cryptocurrency-related disputes. It is stating that settling a debt using a small amount of digital assets would be considered legal if both parties agree. This is a significant update to the country’s existing blanket ban on digital assets. Furthermore, as it recognizes that cryptocurrencies have network virtual properties. However, the court emphasized that this approach would only be permitted if there were no other valid reasons against it.

China’s Top Court Rules on Cryptocurrency Contracts

China’s top court has recently ruled that virtual currency can be used to settle debts arising from mutual exchange, labor service, and other basic relations. The court also clarified that if one party agrees to transfer cryptocurrencies to another, but the receiving party cannot fulfill their end of the deal due to policy restrictions, the court will determine the compensation based on the actual value of the property accepted by the receiving party at the time of signing the contract.

This ruling is a major step forward for the cryptocurrency industry in China, and could have far-reaching implications for investors and businesses alike. It signals a shift in the country’s stance on digital assets, and provides a legal framework for the use of cryptocurrencies in settling contracts.

China’s Ban on Cryptocurrencies: Investor Interest is Surging

Despite China’s ban on cryptocurrencies, investor interest in the digital asset has been on the rise in recent months. According to a late 2022 report, China was ranked among the top ten countries in the global crypto adoption index. In September 2022, the Beijing Number One Intermediate People’s Court ruled that citizens can still trade cryptocurrencies, but only as virtual assets and not as a currency.

This ruling has opened up a new avenue for investors to explore the potential of cryptocurrencies, despite the ban. With the right guidance and understanding of the legal framework, investors can take advantage of the growing interest in cryptocurrencies and emake informed decisions.

The recent Supreme Court guidelines have left the legal status of cryptocurrencies unclear. Despite this, China is showing signs of recognizing the growing interest in digital assets. A report by Finbold reveals that the country has implemented a 20% personal income tax on investment profits for individual cryptocurrency investors and Bitcoin (BTC) miners.

This indicates that China is taking steps to acknowledge the increasing popularity of cryptocurrencies. Moreover, even though the legal status of these digital assets is yet to be determined. As the interest in cryptocurrencies continues to grow, it will be interesting to see how the legal landscape evolves in the near future.

Disclaimer: Cryptocurrency trading involves significant risks and may result in the loss of your capital. You should carefully consider whether trading cryptocurrencies is right for you in light of your financial condition and ability to bear financial risks. Cryptocurrency prices are highly volatile and can fluctuate widely in a short period of time. As such, trading cryptocurrencies may not be suitable for everyone. Additionally, storing cryptocurrencies on a centralized exchange carries inherent risks, including the potential for loss due to hacking, exchange collapse, or other security breaches. We strongly advise that you seek independent professional advice before engaging in any cryptocurrency trading activities and carefully consider the security measures in place when choosing or storing your cryptocurrencies on a cryptocurrency exchange.

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Kassidy Florette
Kassidy followed her friends to buy her first Bitcoin in 2015, has been participating in various projects since 2019 as a marketing communication lead. Her knowledge and passion brings her in as a contributor.