Bitcoin’s legal status is becoming clearer

Chapter 0 Introduction

The legal status of Bitcoin has attracted much attention. The latest draft of the General Provisions of Civil Law clearly intends to confirm the legal status of Bitcoin. I read the relevant provisions of the draft as soon as possible and consulted a lawyer.

Let’s analyze this in detail.

Chapter 1: The original text of the General Provisions of Civil Law concerning Bitcoin

The Expert Draft of the Civil Code of the People's Republic of China and the General Principles of Civil Law was submitted to the National People's Congress for deliberation on June 24, 2015. One year later, on June 27, 2016, the Standing Committee of the National People's Congress reviewed the General Principles of Civil Law for the first time:

On June 27, 2016, the Standing Committee of the National People's Congress reviewed the first draft of the General Principles of Civil Law for the first time and plans to complete the entire Civil Code in 2020.

"General Provisions of Civil Law" (Draft) Section 3 Other Civil Rights Objects Article 111 [Network Virtual Account Property]

Article 111 [Online Virtual Property]

Online virtual property is protected by law.

This makes it clear that online virtual property is protected by law.

Chapter 2 Glossary

Let’s first explain what “civil rights object” means.

The object of civil rights refers to the object to which the civil rights enjoyed and the civil obligations undertaken by the subjects of civil legal relations are directed. Scope of the object of civil rights: (a) things (b) behavior (c) intellectual achievements (d) securities (e) rights (f) non-material interests

For example, if I borrow 100 yuan from Zhang San, then Zhang San has a debt claim of 100 yuan. This debt claim is called the object of right.

So what is "cyber virtual property"? Does Bitcoin fall within this definition? Unfortunately, the draft of the General Provisions of the Civil Law does not mention this definition. Generally speaking, it will be carefully defined in the details, but the draft has not yet been released. When will it be available? The original text said that the entire Civil Code will be completed in 2020, and there will be a detailed definition by then. At present, it can only give way to "the judge's discretion". That is, in the absence of a clear definition in the law, when a civil case is brought to court, the judge has the subjective consciousness to judge the definition of the object of the right.

However, there have been many civil cases in mainland China where judges have made "discretionary decisions" on online virtual property. In other words, there have been cases where the judges extended the judgment of "online virtual property" when deciding the case. For example, for gaming equipment, the lawyers have summarized the following rules:

Although virtual property exists in the online environment, players are given economic connections with the real world when they obtain and use it, and thus it has property attributes. (Quoted from "Legal Characteristics of "Virtual Property" and Its Ownership")

From this, it is easy to conclude that, legally, Bitcoin falls within the definition of “cyber virtual property” in China.

Of course, everything should wait until the Civil Code is fully completed before final confirmation, and now the relevant civil and criminal cases can only give way to the "judge's discretion."

Chapter 3 What this means for Bitcoin

The final promulgation of the Civil Code means that there is a clear path for the protection of "cyber virtual property" including Bitcoin . Before this, there was no clear prediction of the results of such civil disputes or even criminal cases. Law enforcement agencies, such as the public security bureau, courts and procuratorates, may not file a case for such incidents. They will say, "You guys can have fun by yourselves, don't bother me." Even if a case is filed, the final judgment will show "the judge's discretion." This gives both parties room to operate. But with a clear legal definition, they must file a case.

For example, a month ago I borrowed 100 bitcoins from you, and the price was 3,000 RMB per bitcoin at that time. We agreed to pay it back in one month, but I didn't expect that the price would rise to 4,000 RMB a month later, but I insisted on returning it at 3,000 RMB. At this time, a civil dispute will arise between the two of us. You hire a lawyer to sue me in court, but once the court looks up the civil law, it may not accept the case because there is no such thing as bitcoin. Even if the case is accepted, the judge will add a lot of subjective judgment because there is no clear legal provision to make a judgment. This is the "discretionary power" granted to the judge by the law. Because there is discretionary power, there will be room for operation. For example, I will give the judge some money to make a judgment in my favor.

But now it is different. Even if it is a draft, the probability of the court accepting civil disputes (including criminal cases, of course) related to "cyber virtual property" including Bitcoin has greatly increased. If it is finally promulgated, it must be accepted, which will also reduce the space for black-box operations.

Because the legal definition has begun to unfold. This is a very good advertising effect for Bitcoin. At least for legal professionals, they must understand Bitcoin and other online virtual properties. This will eliminate the public's misunderstanding of Bitcoin and even increase the demand for Bitcoin. This is a real benefit to Bitcoin.

In addition, because there is a clear legal definition of rights, any disputes that arise will have predictable outcomes, which is conducive to the development of Bitcoin business transactions.

This will also be a deterrent to the evil behavior in the cryptocurrency circle . It is not like now, where people are running around everywhere and no one has reported it to the police.

Are there any adverse effects?

What we can imagine is that there will be a discussion on the taxation of Bitcoin . Our government is a government that likes to develop new taxes. Bitcoin has created huge social wealth. If there is a clear legal definition, taxation is likely to be put on the table, especially income tax.