The Chinese Supreme Court recently held a conference to address the legal issues surrounding virtual currencies. It was highlighted that while virtual currency does not have the standing of legal tender, it is still possible to identify these currencies as having some of the properties of a network virtual asset. Therefore, it is possible in some circumstances for virtual currencies to be legally used to repay debt.

The conference also discussed the subject of crypto ‘mining’ - the process of generating virtual currency by using a computer to solve complex algorithms. The court established two primary ways that disputes surrounding ‘mining’ arise. The first of these is when parties agree to use virtual currency to pay for debt arising from a service, for example. The second relates to disputes that appear in cooperative mining - when a party agrees to purchase, lease, share, or store a mining machine. Depending on the case, the court will establish whether the contract of purchase orStorage is legal.

The meeting made it clear that virtual currencies may potentially be valid forms of repayment and that it is essential to consider the national policies on the financial and industrial regulation when attempting to engage with cryptocurrencies. The State Council has previously issued a range of policies aimed at controlling the risk of speculation in trading, such as prohibiting the development and participation of virtual currency related businesses.

It is important to remember that virtual currencies do not have the same legal standing as physical money. Therefore, it is essential to gain an understanding of the restrictions and regulations underlying virtual currencies and to ensure that contracts are legally binding when investing or engaging with crypto. It is advised to carefully read any relevant information before investing in cryptocurrencies to reduce the risk of dispute.



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