Is China Easing Its Stance on Cryptocurrency? The People's Court Daily Sends an Important Signal

On June 19, The People's Court Daily published an article from the Shenzhen Intermediate People's Court in Guangdong, once again bringing the sensitive term 'virtual currency' to the forefront. However, this time, it is not a 'one-size-fits-all' crackdown, but rather indicates a potential exploration of compliant processing pathways at the policy level.

The article clearly states: Virtual currency possesses corresponding property attributes, which is highly significant. It is important to note that for a long time, virtual currency has often wandered in the ambiguous zone of 'non-property', 'non-legal', and 'non-compensable' in legal practice. Now, the 'consensus' expressed from the court system essentially begins to open a gap for the legal handling, regulation, and protection of virtual assets from the perspective of judicial cognition.

The article further proposes a 'two-pronged approach':

1. Compliant monetization pathway: After filing with the People's Bank, foreign exchange management, and other departments, one can entrust a third-party qualified institution to legally convert virtual currency into fiat currency through compliant trading platforms in offshore judicial jurisdictions such as Hong Kong. This approach is expected to provide a 'sunshine channel' for handling assets involved in cases, corporate liquidation, cross-border compliance, and other scenarios.

2. Black hole destruction mechanism: For virtual currencies involved in terrorism, drug-related activities, and private mining that harm national security and public interests, they can be 'one-click sent into a black hole', destroying the address and completely withdrawing from circulation. This is also an institutional response to the impression of the crypto world being 'lawless'.

What does this imply?

This does not mean that China is immediately opening exchanges or allowing free issuance of coins. But it at least sends out three major signals:

1. Policy attitude is becoming more pragmatic and rational: It is not merely about suppression, but distinguishing between 'legal + illegal', and 'compliant + abuse'.

2. The pilot position of Hong Kong is highlighted: Utilizing Hong Kong's platform for compliant monetization is becoming a legally suggested pathway.

3. Future regulatory interfaces are reserved: While promoting the crackdown on illegal trading, there is also an exploration of compliant circulation methods, indicating that China may be preparing for a 'soft access' to the global crypto landscape.