1/ The official account of the Shenzhen International Court of Arbitration released an explanation on a recent share transfer dispute that involved bitcoin, bitcoin cash, and bitcoin diamond & determined that crypto is protected under China’s current property & contract law.
(Link: mp.weixin.qq.com/s/U_qDgQN9hceL…)
2/ BTW IN CASE THERE IS ANY CONFUSION ON THE LEGAL IMPLICATIONS: arbitrators do **NOT** make laws. So please do not interpret this one arbitration decision as an official legal rule change. But this is still important. Read on for the arbitrator’s rationale..
3/ Because the various legal definitions for crypto under current Chinese laws and regulation are unclear, the arbitrator relied on existing contract law and general provisions of the civil law to determine the contract that is at dispute here.
4/ Aside from the existing laws, the arbitrator also relied on the “spirit of the original agreement” as well as the “original intent" of the parties & determined that bitcoin has *property rights* and thus should be protected under the law.
5/ Facts of this case is a little much to get into, but it involved disagreement over a share transfer agreement that was signed between three parties (A, B and C).
6/ The amount of assets at dispute: 20.13BTC、50BCH、12.66BCD. (Plus interest in USD)
7/ Party A is a Partnership, Parties B & C are natural persons. Under the agreement, C held 5% of the partnership’s shares ($550,000 in RMB), and paid back 250k of that to A.
8/ Now, B had ask C to manage his/her bitcoin (and other cryptoassets), which saw profits over the disputed time period.
9/ Because of this profit, B agreed to pay back the remaining $300,000 to A on behalf of C while C kept managing the crypto assets.
10/ HOWEVER, once B paid back A in full (in C’s behalf!!), C refused to give back the BTC/BCH/BCD. So B is made and wants the shares and the cryptoassets back.
11/ Now that the facts are straight.. what did the arbitrator (reminder: this is a private settlement and not an official opinion from a judge) say???
12/ Basically, the defendant tried to say that because ICOs are illegal, this entire contract should be void. The arbitrator disagreed with this.
13/ In the arbitrator’s view, whether or not bitcoin is legal, the **circulation and the payment** of bitcoin is not illegal. Bitcoin does not have the same rights as fiat, but that does not mean that holding or paying w crypt is illegal.
14/ So, just because a repayment contract between private parties involved bitcoin, does not mean that the contract is invalid.
15/ Second point that the arbitrator makes: sure, bitcoin lives in the digital world and has diff. characteristics than fiat, but that does not stop it from being a form of payment.
16/ Third, just because bitcoin is not a legally recognized currency does not mean that, as a *property* it should not be afforded legal protection.
17/ My fav sentence: "The Party contends that Bitcoin has characteristics of a property (SOV), can be controlled by the owner, and has economic value to the owner. It does not break any laws. This arbitrator agrees.”
18/ IN CONCLUSION: this is just one arbitrator’s view on bitcoin and the law but damn this was one fascinating read and made me want to hug the arbitrator and just say YOU GO GIRL (OR GUY) (OR MAGICAL UNICORN)
ps China does not hate bitcoin.
(thank you @nlw for paging me!!)
ps China does not hate bitcoin.
(thank you @nlw for paging me!!)
