Analysis on the protectability of virtual currency transactions: Bitcoin property attributes should be protected by law

In the past two years, this one-size-fits-all approach to identification has changed. Under the premise of not violating the mandatory provisions of laws and administrative regulations, the holding and legal circulation of virtual currency between individuals can still be protected by law, and the property attributes of virtual currency have gradually been recognized.

In November 2018, the Shenzhen Court of International Arbitration clarified the legal attributes of Bitcoin and the validity of Bitcoin transaction contracts in a Bitcoin arbitration case, which is of benchmark significance.

In this case, the Equity Transfer Agreement signed by the two parties to the dispute stipulated that payment would be made in special types of items such as BTC (Bitcoin), BCH (Bitcoin Cash) and BCD (Bitcoin Diamond). Regarding the validity of the Equity Transfer Agreement, the Arbitration Court held that "including the 1994 Announcement, there are no laws and regulations that explicitly prohibit parties from holding Bitcoin or trading Bitcoin between private parties, but rather remind the public to pay attention to relevant investment risks. Bitcoin, Bitcoin Cash, etc. cannot be circulated and used as currency (i.e. legal tender) in the market. However, there are no laws and regulations prohibiting them from becoming the object of delivery or circulation between private parties." In this case, the content of the Equity Transfer Agreement stipulated the repayment obligation between two natural persons, which did not belong to the transaction activities restricted by the 1994 Announcement, such as token issuance and financing, and was not suspected of illegal issuance of token tickets, illegal issuance of securities, illegal fundraising, financial fraud, pyramid selling and other illegal and criminal activities. Therefore, without violating the mandatory provisions of laws and administrative regulations, the contract signed by the two parties based on the true intention is legal and valid .

In addition, the arbitration court recognized the property attributes of Bitcoin. It believed that the fact that Bitcoin is not legal tender does not prevent it from being protected by law as property . Bitcoin can be controlled and managed by human power, has economic value, and can bring economic benefits to the parties.

However, in the second instance, the Intermediate People's Court of Fangchenggang City, Guangxi Zhuang Autonomous Region overturned the first instance judgment, holding that the agreement between the respondent and the appellant to purchase 14,000 urimi at a price of RMB 1.4 million was the true intention of both parties and the sales contract was established and valid in accordance with the law .

On the one hand, the act of buying and selling Urimi, which is also a virtual currency, between the two parties does not fall under the token issuance and financing activities restricted by the "94 Announcement" ; Urimi does not have the monetary attributes of being issued by the monetary authorities, legal tender and compulsory, and is not a real currency. It cannot be circulated and used as currency in the market to purchase goods.

On the other hand, Yurimi can be the subject of a sales contract. According to the Notice, although Yurimi in this case cannot be used as currency or exchanged with legal tender, it is undeniable that virtual currencies such as Yurimi can be accepted as specific virtual commodities by citizens who legally use currency to purchase and hold them at their own risk without explicit prohibition by laws and administrative regulations. Financial institutions and payment institutions cannot conduct business related to Yurimi, and it cannot be presumed that the state prohibits normal private transactions of Yurimi virtual currencies . Regarding the question of whether Yurimi has trading value, the market value of Yurimi fluctuates greatly, and there is currently no unified and definite standard for judging trading time and trading volume. It depends on the knowledge, experience, and preferences of the trading subject, and is closely related to market trading conditions, but the above characteristics do not prevent it from becoming the subject of citizen transactions .