The Chinese government has formally taken an anti-crypto stance for several years. Paradoxically, it is putting in place more and more measures for the regulation of the crypto industry. In September 2022, Beijing’s Number One Intermediate People’s Court allowed citizens to trade the cryptos despite the ban. Recently, the Supreme Court of the country issued guidelines on debt settlement with cryptos. Here is what it is.
Use small amounts of cryptos to settle debts!
After announcing the improvement of its blockchain standards, China is proposing a new development in the crypto sector. Indeed, the Supreme Court has authorized the use of cryptos to settle debts. It is now legal to settle debt with a small amount of digital assets. Approval, however, is subject to two rules, the first being that both parties must agree. The second rule is that the court must have found no valid reason to object to the crypto settlement.
The Supreme Court of China said : “If it is agreed between the parties that a small amount of virtual currency will be used to set off debts arising from mutual exchange, labor service and other basic relationship, if there is no other causes invalid, the people’s court will recognize the contract as valid“.
The court raised the possibility that the receiving party of the transfer could not fulfill its part of the contract. If this is due to political restrictions, compensation will be determined by the court. The compensation will be fixed according to the real value of the property accepted by the party by signing the contract.
The new development is yet another proof of China’s contradictory stances on crypto. The country is taking a shifting stance on the new asset class. First it bans cryptos, then it sets up regulations for the industry and then rolls out the digital yuan. All told, investor interest in cryptos in China has increased significantly in recent months. At the end of 2022, a report revealed that China is among the top ten countries in the Global Crypto Adoption Index.
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