The emergence of virtual digital currencies in the blockchain era has introduced new complexities into everyday life. Characterized by extreme volatility, these assets face significant legal scrutiny, particularly in civil disputes. This article examines key civil legal issues surrounding virtual currencies, drawing from judicial precedents and regulatory frameworks.
Are Virtual Digital Currencies Considered "Money"?
Virtual currencies lack official monetary status in China. They are:
- Not issued by monetary authorities
- Devoid of legal tender status
- Without mandatory circulation
However, recognized virtual currencies like Bitcoin (BTC) and Ethereum (ETH) qualify as protected virtual property under Chinese law when they demonstrate:
- Value (through abstract labor investment)
- Scarcity
- Exclusivity of control
Exceptions: "Air coins" without these characteristics may involve fraudulent schemes and receive no legal protection.
Validity of Mining Equipment Contracts
Key Considerations:
- Mining activities violate China's carbon neutrality goals
- The National Development and Reform Commission prohibits cryptocurrency mining
- Related equipment purchase contracts are void as against public interest
Case Reference: Guangzhou Intermediate Court (2022) Yue 01 Min Zhong 19334 ruled mining equipment contracts invalid, ordering full refunds.
Investment Disputes Involving Virtual Currencies
Regulatory Background:
- 2017 regulations banned initial coin offerings (ICOs)
- Virtual currency financing violates financial regulatory policies
Landmark Case: Shanghai Minhang Court (2021) Hu 0112 Min Chu 31119
- Invalidated ETH-based investment contract
- Ordered refund of principal investment
- Established precedent that virtual currency investment contracts violate mandatory regulations
Validity of Investment Management Contracts
Beijing No. 3 Intermediate Court (2021) Jing 03 Min Zhong 18277 established:
- Bitcoin investment entrustment contracts contradict public order
- All related losses borne by investors
- Judicial non-protection stance toward virtual currency investments
Practical Challenges:
- Difficulty determining refund valuation
- No authorized exchange platforms for conversion
- Timing issues for value assessment
Enforcement Challenges in Civil Cases
Virtual currency presents unique execution difficulties due to:
Identification Challenges:
- Difficulty locating digital wallets
- No centralized regulatory oversight
Execution Methods:
- Monetary Compensation: Converting to fiat currency (complicated by exchange prohibitions)
- Asset Recovery: Requiring private key disclosure (often resisted by debtors)
Current Judicial Trends:
- Recognize virtual currency as property (within legal boundaries)
- Case-by-case valuation determinations
- General invalidation of investment/trading contracts
- Significant enforcement obstacles
Emerging Judicial Practice Issues
Shanghai cases reveal persistent challenges:
- Legal qualification of virtual currency transactions
- Valuation determination difficulties
- Evidence collection and verification standards
- Coordination between civil and criminal proceedings
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FAQ Section
Q: Are all virtual currencies legally protected in China?
A: Only those demonstrating verifiable value, scarcity, and exclusivity qualify as protected virtual property. "Air coins" receive no protection.
Q: Can mining equipment contracts be enforced?
A: No. Chinese courts consistently void these contracts as violating public interest and environmental policies.
Q: What happens if my virtual currency investment contract is voided?
A: While principals may be refunded, profit claims and loss compensation generally receive no judicial support.
Q: How can virtual currency be recovered in enforcement cases?
A: Courts may order either monetary compensation or direct return of coins, though both face practical implementation challenges.
Q: Why do investment contracts involving virtual currencies get invalidated?
A: They violate China's strict prohibitions on virtual currency financing and trading established since 2017.
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This analysis reflects the evolving legal landscape surrounding virtual digital currencies in civil matters. Professionals should monitor regulatory updates and judicial trends for the latest developments.