Crypto is Property: Chinese Court Upholds Citizens Rights to Own Bitcoin

The Shenzhen Court of International Arbitration (SCIA) has recently affirmed that cryptocurrencies, specifically bitcoin and several of its hard forks, are considered legal property and Chinese citizens have a right to own and transfer them.

The SCIA recently published an analysis of a contract dispute over WeChat, describing the legal proceedings of a case in which one individual managed nearly $500,000 worth of crypto assets on behalf of another private individual. The manager then refused to return these assets after their client dealt with a third party.

The defendant in this case argued that the whole arrangement between the three parties was invalid, as bitcoin, ICOs and other cryptocurrencies are not recognized as currencies under Chinese law.

The arbitrator sided against this reasoning, ruling instead that the holding of these assets as property is not itself illegal, so it is not illegal to include the transfer of crypto assets as a binding clause in business agreements. Further, the arbitrator was careful to note that bitcoin “is not a currency issued by the monetary authority nor electronic legal tender,” though this should not preclude it from being protected as personal property.

“Bitcoin is not a legal currency, but it is no doubt that it deserves protection by law as property. Bitcoin has property attributes…economic value, and can bring economic benefits,” the court claims.

The case only involved bitcoin and two of its hard forks, bitcoin cash and bitcoin diamond, and, therefore, arguably does not rule out further legal disputes in the future over other cryptocurrencies not derived from the original Bitcoin protocol.

It’s important to note that the SCIA is not a lawmaking body itself, and the arbitrator in question does not have any influence over the future status of crypto assets as a legal currency in Chinese jurisdictions. Nevertheless, this does set a judicial precedent for citizens to treat crypto assets as legal property.

Although the Chinese legal space often seems opaque to outside audiences, this case should serve as a clear example to show that the courts are not intractably hostile to the rights of private citizens over bitcoin ownership.

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Will Citizens Have Access to Technology?

Earlier this week, a group of cryptocurrency exchanges in Chile applied to the courts to fight the decision of banks to shut down their bank accounts. The exchanges, including Buda, Orionx, and CryptoMarket (CryptoMKT), state that the banking system in Chile is taking matters into their own hands and that they are “killing the entire industry.”

Banks Itau Corpbanca and Scotiabank announced the closure of the bank accounts of BUDA and CryptoMKT on March 19. A week later, the state-owned Banco del Estado de Chile followed the move by confirming the closure of the accounts of all three cryptocurrency exchanges.

Now, as the exchanges wait for their case to be heard, with some news set to emerge on April 20, according to BUDA’s co-founder and CEO Guillermo Torrealba. The exchanges are left puzzling as to why the banks feel they have the power to deny access to a new wave of technology.

Situation in Chile

Speaking to Cointelegraph, Torrealba outlines the cryptocurrency situation in Chile as precarious, and that the entire open and liberal feeling on this technology is not all as it seems:

“Chile is showing its “B” side, that of being an extremely conservative country, even though we make huge efforts for the world to see us as liberals.”

Torrealba explained that despite the outcry in the media, and even across Twitter, banks are refusing to respond or open their closed accounts. Moreover, according to Torrealba the banks, who seemingly have a large share of power in the country, are making the cryptocurrency environment worse than Ecuador, Bolivia or China:

“The banks have shown their darkest side. Restricting a whole country to access a technology just because they didn’t like it. This is even worse than Ecuador, Bolivia or China’s case, where the government was the one that took the initiative. Because you could judge the decision of a government, because, at the end of the day these players represent the people, and people are free to take whatever path they feel is right.”

Banks ruling over regulators

The issue for Torrealba is that the banks, by closing these accounts and effectively stopping the running of cryptocurrency exchanges, are slowing and prohibiting the progress of cryptocurrency in the country. There is no rule, law, or legislation against digital currency in Chile, yet the banks are operating like stern regulators.

“In Chile the story is different” Torrealba said. “There hasn’t been one regulator, legislator or government official saying that cryptocurrencies aren’t legal, it was just the decision of a very powerful sector of the economy: the banking industry.”

The reason that Torrealba is up in arms about this decision, and is going as far as to get the courts involved, is that he feels as if there has been a restriction on economic liberties.

“So why is this fight important? Because of economic liberty. But not even liberty from an abusive government, but liberty from a corrupt and overpowered financial industry which is protecting itself in the most archaic and prehistoric way: denying a technology in the most open and overly bold way they could find. [The banks are] so openly abusive that everyone agrees that what they’re doing is illegal but that isn’t enough for them to stop. They’re just too big to need to tread carefully, or to act inside the regulatory frame.”

Of course, Torrealba is directly affected by this banking blockade, and for that reason, has every reason to feel the way he does. His justifications may well be emotive, and perhaps inflammatory, however, he is not alone in thinking what he does.

Outsider reactions

There was a slew of reactions from Twitter users both inside and outside of Chile, with the general idea of banks setting the boundaries of cryptocurrency usage clearly getting under the skin of a number users.

But it was not only those reactionary tweets that found this move as odd. Barry Silbert, CEO and founder of Digital Currency Group, tweeted directly to the banks imploring them to change their decision.

Arthur Gervais, a Blockchain professor at Imperial College London and co-founder of Liquidity.Network also agrees with Torrealba about this being a degradation of fundamental rights. Professor Gervais told Cointelegraph:

“Traditional finance intermediaries are likely to experience a fundamental shift in their business models, which understandably creates tensions. The attempt, however, to censor decentralized technology, is not only likely to fail and a fundamental deprivation of human rights, but it’ll further empower and motivate those that develop novel Blockchain technology.”

Ongoing, and precedent setting

It will be interesting to see what comes of this case, and if the exchanges are successful. Cointelegraph will continue to update the story as and when news becomes available.

If the defence of cryptocurrencies as a right for people to access in terms of its technological aspects is successful, it could lead to a lot of fightback from others who are seeing their cryptocurrency businesses being unfairly limited.

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US President Trump Bans US Citizens From Buying Petro | News

President Donald Trump of the US has banned the Venezuelan government-backed cryptocurrency, the Petro, by executive order March 19, Bloomberg reports.

The ban reportedly comes as part of a campaign to put pressure on the Venezuelan government of President Nicolas Maduro. By the order, US citizens are banned from engaging in transactions using the oil-indexed digital currency.

The ban frustrates the efforts of Maduro’s government to boost foreign currency reserves. The token offering accepted transactions in US dollars and euros, meaning that Venezuelan citizens could not legally participate, as there is a ban in Venezuela on buying foreign currency.

The order also authorizes US Treasury Secretary Steven Mnuchin to issue regulations to enforce the executive order. The Treasury Department announced sanctions on four Venezuelan government officials earlier this year.

According to Mnuchin, “President Maduro decimated the Venezuelan economy and spurred a humanitarian crisis. Instead of correcting course… the Maduro regime is attempting to circumvent sanctions through the Petro digital currency.”

The Treasury Department further warned investors in January to avoid the Petro, calling it “another attempt to prop up the Maduro regime, while further looting the resources of the Venezuelan people.”

The Petro has struggled in finding legitimacy and interest among foreign governments. Earlier this year, the Venezuelan government claimed that Poland was interested in trading food and medicine for the Petro, which was later denied by the Polish Ministry of Finance and Ministry of Foreign Affairs.  

Cambodia however, seems to have taken inspiration from Venezuela, and is considering its own state-sponsored digital currency, Entepay, Cointelegraph reported earlier this month.

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