Shanghai Court Recognizes Bitcoin as Virtual Property – Does This Mean It’s Legal?

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In a landmark development, the Shanghai High People's Court has officially recognized Bitcoin as virtual property in a recent judicial case. This decision has sparked widespread discussion: does this mean Bitcoin is now legal in China? While the ruling marks a significant shift in how digital assets are perceived within the country's legal framework, the reality is more nuanced than a simple yes or no.

This article explores the implications of the Shanghai High Court’s decision, clarifies common misconceptions about Bitcoin’s legal status in China, and provides insight into how this ruling fits into the broader regulatory landscape.

Understanding the Case: A Landmark Ruling

On May 5, the Shanghai High People's Court released a case involving a civil dispute over Bitcoin ownership. The case originated in 2020 when Plaintiff Cheng Yi (a pseudonym) filed a lawsuit against Defendant Shi Xiaodong (also a pseudonym), demanding the return of one Bitcoin.

The Shanghai Baoshan District Court ruled in favor of the plaintiff in February 2021, ordering the defendant to return the Bitcoin. However, during enforcement, authorities were unable to locate the Bitcoin through domestic judicial channels. The defendant had transferred the asset to a third party via an overseas cryptocurrency exchange—information that could not be traced under China’s current cross-border digital asset enforcement mechanisms.

With no way to physically recover the Bitcoin, both parties agreed on a monetary settlement based on the original purchase price: 84,000 RMB.

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Why This Case Matters: Judicial Recognition of Virtual Property

What makes this case stand out is not just the outcome—but who issued it. This is the first time a provincial-level high court in China has formally commented on the nature of Bitcoin, setting a precedent with far-reaching implications.

The Shanghai High Court stated in its analysis:

“Bitcoin is an encrypted digital currency formed based on blockchain technology. Although there are no specific laws regulating it, due to its economic value and tradable characteristics, it meets the basic attributes of property and should therefore be protected under property law.”

This aligns with growing judicial trends across China. As early as 2019, the Hangzhou Internet Court recognized Bitcoin as virtual property in a landmark ruling (Wu v. Yaozhi Network & Taobao). However, this latest decision from Shanghai carries greater weight due to the court’s higher jurisdictional authority.

Legal expert Xiao Sa, a council member of the China Bank Law Society, noted that while this isn’t the first time Bitcoin has been classified as virtual property, it is the first such classification issued by a high-level appellate court. This strengthens consistency in civil rulings and provides guidance for future cases—especially in Shanghai’s financial litigation ecosystem.

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These keywords reflect user search intent around legality, rights protection, and regulatory clarity—areas where this case offers valuable insight.

Does Recognizing Bitcoin as Property Equal Legalization?

A common misconception is that recognizing Bitcoin as virtual property equates to full legalization. This is not accurate.

China has maintained a strict stance against cryptocurrency trading and mining since 2021. The People's Bank of China and nine other government agencies jointly issued a notice titled On Further Preventing and Dealing with the Risks of Virtual Currency Trading Speculation, which clearly states:

“All forms of virtual currency-related financial activities are illegal financial operations.”

This includes exchanges, trading platforms, and investment promotions involving cryptocurrencies.

However, recognizing Bitcoin as virtual property means that individual holdings may still be protected under civil law, even if commercial use is prohibited. In other words:

This distinction is crucial: protection of private assets ≠ legalization of public transactions.

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FAQ: Common Questions About Bitcoin Legality in China

Q1: Is Bitcoin legal in China?

No. While individuals may hold Bitcoin privately, trading, exchanging, or using Bitcoin as payment is illegal under current regulations. Financial institutions and payment companies are banned from processing any cryptocurrency transactions.

Q2: Can I sue someone for stealing my Bitcoin?

Yes—under certain conditions. As shown in the Shanghai case, courts may treat Bitcoin as virtual property with economic value. If you can prove ownership and loss (e.g., unauthorized transfer), you may pursue civil remedies for damages.

Q3: Does this ruling change national policy?

Not directly. The Shanghai High Court’s opinion influences civil case interpretation but does not override national financial regulations. Policy changes would require action from central regulators like the PBOC or State Council.

Q4: Can I recover lost or stolen Bitcoin through Chinese courts?

Possibility exists, but practical challenges remain. Courts lack direct access to blockchain data or foreign exchanges. Enforcement often depends on mutual agreement or conversion into RMB compensation.

Q5: Are other cryptocurrencies also considered virtual property?

Judicial trends suggest yes. Ethereum, Litecoin, and other major cryptocurrencies with verifiable scarcity and market value may receive similar treatment in civil disputes—though no universal standard exists yet.

Q6: What should I do if involved in a crypto dispute?

Document everything: transaction IDs, wallet addresses, communication records, and purchase history. Seek legal counsel experienced in blockchain-related civil litigation. While criminal enforcement is limited, civil claims for compensation are increasingly viable.

Broader Implications for Digital Asset Rights

The Shanghai ruling reflects a maturing legal understanding of digital assets. Despite strict financial controls, Chinese courts are beginning to acknowledge that people do own digital items—whether NFTs, game tokens, or cryptocurrencies—and deserve some form of legal recourse when those assets are compromised.

This approach mirrors global trends where countries like the U.S., Singapore, and Germany recognize crypto assets as property for tax or civil purposes—even without full regulatory approval.

Moreover, as blockchain technology becomes more integrated into supply chains, intellectual property, and decentralized finance (DeFi), courts will face increasing pressure to define digital ownership clearly.

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Final Thoughts: A Step Toward Clarity—Not Freedom

The Shanghai High Court’s recognition of Bitcoin as virtual property is a significant step toward legal clarity, not a green light for open crypto trading. It affirms that digital assets have real-world value and deserve protection in civil law—even within a tightly regulated environment.

For individuals, this means greater potential for recourse in disputes. For policymakers, it underscores the need for comprehensive legislation that distinguishes between speculative trading and legitimate personal asset ownership.

As blockchain adoption grows worldwide, China’s cautious but evolving judicial stance may serve as a model for balancing innovation control with individual rights protection—without compromising financial stability.

While full legalization remains off the table for now, this case signals that digital property rights are no longer being ignored—and that could shape the future of asset law in the digital age.