A few weeks ago, Zerohedge posted an article claiming that China was planning on imposing capital controls on bitcoin. The piece reported on potential restrictions levied on Bitcoin transactions in and out of the country and was sourced by a single screen shot of a Bloomberg report terminal.
The report more precisely explained “… some investors bought Bitcoin on local exchanges and sold them offshore, evading rules on foreign exchange and cross-border fund flows…” but the official was left unidentified as this information has yet to be made public.
The nature of the release leaves much room for skepticism; it stands to reason however that citizens of China would utilize this method to protect the value of their wealth and it would be equally reasonable to assume that government officials would look to quell the practice as it affects their macroeconomic policies.
Bitcoin Regulations in China
This release however credible should not threaten or bring into question the current legality of bitcoin in the nation. On June 27th 2016 during the 12th National People’s Congress Standing Committee the Civil Code General Provisions Draft (CCGPD) was passed in China. This established virtual properties and data to officially be recognized as people’s rights.
BitKan’s piece highlights several elements of Bitcoin regulations in China. Two specific articles related to virtual properties and data information; Article 104 and 108.2.8,
“Objects includes immovables and movables. Specific rights or virtual properties defined as property rights objects by the Law, shall be treated accordingly”and “(intellectual Properties includes) data information”
Under Chinese law this classified digital goods such as bitcoin as civil rights objects. While Chinese citizens do not enjoy a familiar US style bill of rights, the country has increasingly allowed for the passage of rights that are guaranteed to their citizens.
With the more recent passage of the CCGPD mentioned above, it appears that the right of Chinese to use and exchange bitcoin is not under direct threat. According to the People’s Bank of China, bitcoin is only considered a virtual commodity and can’t be used as a currency. Rather than using bitcoin to purchase goods and services, the Chinese bitcoin community focuses predominantly on trading and mining.
The immediate risk therefore, of banning the use of Bitcoin appears to be unsubstantiated and driven by speculation. The Chinese Bitcoin website BitKan notes a similar news story released by Bloomberg and published on May 10 of this year ringing similar “potential banning” alarm bells but again with no end product or official comment from the Chinese government.
Richard Schultz
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