China plays both sides in crypto: Trading is legal, crypto payments illegal

A court in Beijing ruled that locals are permitted to trade in cryptocurrencies, the catch was that crypto cannot be used as a substitute for money. Despite several bans on Bitcoin and cryptocurrencies since 2013, Beijing considers crypto trading legal and crypto payments illegal. 

Also read: BREAKING: Ethereum Merge begins, the good, bad and ugly of crypto’s $22 billion bet

Beijing’s Number One Intermediate People’s Court rules crypto trading legal

Using cryptocurrencies as a substitute for money is illegal in China, however locals are permitted to trade in cryptocurrencies. A Beijing court offered these contrasting views on crypto. On the face value, the decision seems odd since China has banned cryptocurrencies several times since 2013. 

In August 2022, Chinese authorities shut down hundreds of social media accounts that promoted crypto investments on grounds of high returns. Authorities initiated a crackdown on accounts that downplayed risks of volatile crypto investments. This further supports the court’s ruling. 

The Beijing court was ruling on a dispute concerning a Litecoin loan, which involved a promise to pay interest in LTC. While the judge noted China’s prohibition on usage of crypto as payment, it was reasoned that LTC cannot be considered a currency. Since Litecoin is not issued by a monetary authority, it is not an actual currency and cannot be accepted as a medium of exchange. 

Therefore China has banned cryptocurrencies in a partial manner. Crypto cannot be used to make payments, however it can be used as an asset, traded on exchange platforms. Since there is a framework of laws governing cryptocurrencies, the court considered Litecoin a digital asset and pronounced a ruling. 

Trading in crypto is legal despite differences in conclusive rulings from Chinese authorities and the Beijing Court. Asian countries like India have taken a similar position, there is no prohibition on the trading of crypto across exchange platforms. 

Singapore has issued several warnings in response to cryptocurrency’s volatility. The island nation has not regulated crypto trading, therefore traders and retail investors don’t require approval for trading.