​China’s Supreme Court approves the use of cryptocurrencies to pay off debts

Despite China’s existing blanket ban on digital assets, the regulation of its cryptocurrency sector continues to evolve with new development.

In a recent update, the country’s Supreme Court released guidelines regarding cryptocurrency-related disputes, stating that settling a debt using a small amount of digital assets would be considered legal if both parties agree, Wu Blockchain reported on May 7.

The court recognized that in this scenario, 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.

“If it is agreed between the parties that a small amount of virtual currency shall be used to compensate the debts arising from mutual exchange, labor service, and other basic relations, if there are no other invalid causes, the people’s court shall recognize the contract as valid,” the court ruled.

The top 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.

China’s conflicting crypto stand

This latest development underscores China’s shifting stance on digital assets and may have significant implications for cryptocurrency investors.

Although China has outlawed cryptocurrencies, there has been a surge in investor interest in recent months. The interest was highlighted by a late 2022 report that revealed that China ranked among the top ten countries in the global crypto adoption index.

Interestingly, as Finbold reported in September 2022, the Beijing Number One Intermediate People’s Court ruled that citizens can still trade cryptocurrencies despite the ban. However, there is a catch – the court stated that interested investors could only treat cryptocurrencies as virtual assets and not use them as a currency.

It is, therefore, unclear if the recent Supreme Court guidelines indicate that the government now recognizes the legal status of cryptocurrencies.

Despite this uncertainty, China seems to be acknowledging the growing interest in digital assets. In this line, as per a previous report by Finbold, the country implemented a 20% personal income tax on investment profits for individual cryptocurrency investors and Bitcoin (BTC) miners.

This material is taken from the website https://finbold.com.