Understanding Virtual Property: Bitcoin and Chinese Civil Law

Bitcoin and Civil Law: A New Perspective

In a recent discussion about China’s General Provisions of Civil Law, a prominent drafter, Yang Lixin, drew a fascinating comparison between Bitcoin and websites. He described both as forms of “virtual property,” a term that may sound like tech jargon to some, but holds significant implications for legality and regulation in China.

The Dichotomy of Virtual Property

Lixin outlined two categories of virtual property: “virtual immovable property” applies to websites, while cryptocurrencies like Bitcoin fall under “virtual movable property.” This differentiation highlights the need for tailored legal frameworks to govern various forms of digital assets.

Why This Matters

As director of the Civil and Commercial Law Science Research Center at the People’s University of China, Lixin’s insights are potentially game-changing. As China moves closer to formally regulating Bitcoin, these distinctions could pave the way for innovative legislation that acknowledges the unique characteristics of digital currencies.

Regulation on the Horizon

With the People’s Bank of China (PBoC) hinting at impending regulations, the messaging has evolved from outright prohibition to a more measured approach. The bank’s recent statements underscored the necessity of regulations on cryptocurrency exchanges. Director Zhou Xuedong remarked,

“A certain level of regulations on Bitcoin trading platforms are indeed necessary. Without the regulations, bubbles will be amplified by speculation.”

The Status of Bitcoin Exchanges

As this regulatory framework takes shape, some exchanges in China are still grappling with the aftermath of regulatory changes, including the suspension of Bitcoin withdrawals for traders. However, the recent encouragement from the PBoC appears to have brought some stability to the markets, as evidenced by a decrease in LocalBitcoins’ trading volume in China from its recent peaks.

Conclusion: The Future of Virtual Property in China

Lixin’s observations mark a possible shift in the perception of digital assets, legitimizing them within the legal landscape of China. As regulations evolve, the characterization of Bitcoin as “virtual movable property” might just be the first step towards a comprehensive legal framework that balances innovation with security.