Owning, Occasionally Trading Bitcoin Is Legal in China, Prominent Lawyer Argues

Sa Xiao, a Council Member at the Bank of China Law Research Association, has recently argued that both owning and “occasionally” trading bitcoin in China is legal, as the country’s regulations currently don’t outright ban cryptocurrencies.

Speaking to local news outlet Beijing News, Xiao argued China’s regulations of virtual property include the right to trade as the owner sees fit. The lawyer’s views are in sharp contrast to those revealed by Chinese authorities, who have banned cryptocurrency trading, initial coin offerings, and more.

He noted that while owning cryptocurrencies has never been illegal in the eyes of Chinese authorities, it may be possible to be punished for dealing with cryptocurrencies. Specifically, he noted that running a BTC trading business that leads to client losses may lead to a punishment according to criminal law.

Notably, the Shenzhen Court of International Arbitration has late last year ruled cryptocurrencies like bitcoin should be protected by law as property, in a case that saw two parties dispute cryptocurrency possession at the end of a contract.

Similarly, the Shanghai Hongkou District Court in China recognized cryptos, including ether, should be protected by law, in a case where a defendant refused to return 20 ETH to an ICO investor.

Xiao didn’t specificy what could be seen as “occasional exchange” or more between individuals, nor did he point towards any figures in specific.

Earlier this year, it was reported the Chinese government was looking to ban all cryptocurrency mining in the country, in a move that would severely affect mining firms taking advantage of cheap energy in some of China’s regions.

Local investors’ interest in cryptocurrencies like bitcoin has seemingly been growing, so much so some believe bitcoin’s recent surge to test the $8,000 mark was aided by Chinese buyers. This, as the crypto’s rise coincided with US President Donald Trump announcing tariffs on hundreds of billions of dollars worth of Chinese goods.

Recently Garrick Hileman, a Macroeconomics Researcher at the London School of Economics (LSE) and the head of research at Blockchain.com, noted that the value of the Chinese yuan appears to be inversely correlated to that of bitcoin.

Notable Bitcoin Trader and Whale Not Bullish on the Hyperinflation Narrative

Colin Muller

Highly regarded Bitfinex trader and crypto whale J0E007 is not banking on the hyperinflation narrative, which is a highly popular notion in the cryptoasset industry, implying it's a fairy tale.

Screenshot from 2020-05-26 13-23-22.png(source: Bitfinex pulse)

This narrative, exhibited for example here, proposes that the aggressive fiscal and monetary intervention on the part of many central banks around the world will eventually lead to sharp devaluations in the values of many fiat currencies—and most importantly of the U.S. dollar.

Propagation of this concept of rampant fiat inflation in the cryptoasset space is generally tied to predictions of a huge increase in the price and/or market capitalization of Bitcoin and other cryptos, although most focus on the flagship cryptocurrency.

A Little More Complicated

In his post, JOE007 linked to a recent report from Alhambra Investments, an asset management and financial research outfit.

The report details lead analyst Jeffrey Snider’s view that the dollar is not going anywhere in terms of demand, although definitely not by virtue of the competence of the U.S. Federal Reserve in handling the unfolding economic crisis lit by COVID-19.

Conceptually, first, any strong desire to hold expensive dollar liquidity buffers is drawn from serious mistrust of systemic conditions – including the central bank’s place in them. If you thought Jay Powell well prepared in advance with effective countermeasures standing at the ready, buffers of any size need not apply.

Jeffrey P. Snider

In short, Snider contends that the Fed under chair Jay Powell has not responded appropriately to the emerging crisis with “effective countermeasures at the ready”; and this bungling in turn has led to a higher international demand for US dollars in order to sit on a larger and safer cushion of “expensive dollar liquidity buffers.”

A complicated subject, to say the least. The upshot for J0E007 being that the dollar-collapsing narrative may have some big holes in it—removing the keystone of that popular Bitcoin use-case narrative.

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