China Loves Bitcoin Again! Except it Doesn’t

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Crypto Twitter has been abuzz with rumors about China legalizing cryptocurrencies because of a recent court ruling regarding their protection under Chinese law. Does this mean China is back in the game? Is the global powerhouse finally softening their stance on cryptocurrencies? The answer is…complicated.

This Town Ain’t Big Enough for Two Currencies

China’s fractious relationship with cryptocurrencies stretches back to the tail end of 2013, where the expanding middle class wanted somewhere fresh to put their money. This money found its way into Bitcoin, sending the price soaring 400% in three weeks before the government slapped a ban on banks handling Bitcoin transactions, which marked the end of the 2013 bull run and the start of a conflicting relationship between China and cryptocurrencies.

Just Take out the ‘De’ Bit

Since 2013 China has clamped down harder and harder on all aspects of crypto for its citizens while simultaneously allowing huge Bitcoin mining farms to spring up, giving China control of much of Bitcoin’s hashing power. President Xi Jinping has also hailed blockchain technology as a ‘breakthrough’ and has associated himself with Chinese ventures like VeChain, lending weight to the theory that China is happy to use domestic blockchain technologies that it can keep an eye on, bringing into question just how decentralized Chinese blockchains will be.

Changing Fortunes for Crypto?

So does the recent court ruling indicate a softening of China’s stance towards crypto? Not really. The case rested primarily on the principle of ownership, with the judge ruling that the Bitcoin in this case should be classed as property of one of the parties and therefore subject to the relevant laws. The judge also stated that, though not legal tender, the circulation and payment of Bitcoin is not in itself illegal, if two parties have agreed on it as a medium of exchange. In this sense Bitcoin is no more or less legal than any other physical entity you care to name, if it has values to both parties. That’s still about as much as you can do with Bitcoin in China though, at least for the foreseeable future.