The rise of decentralized finance (DeFi) in mid-2020 sparked a bullish trend across the digital currency market. By early 2021, Bitcoin and other cryptocurrencies saw staggering price surges, with Bitcoin reaching an all-time high of $58,000. This meteoric rise caught the attention of mainstream media, including China's state broadcaster CCTV, leaving many newcomers wondering: Why is Bitcoin so volatile, and is it even legal?
The Evolution of Money: From Shells to Cryptocurrencies
Historically, societies used贝壳 (shells), copper, silver, and gold as currency—materials with intrinsic value beyond their monetary use. Over time, governments introduced纸币 (paper money), backed solely by信用 (credit). Today, digital payments via Alipay or WeChat Pay dominate transactions, proving that货币 (currency) can exist without physical form.
This logical progression raises the question: Could Bitcoin become the next evolutionary step? Notably, PayPal integrated Bitcoin, Ethereum, and Litecoin into its payment system, enabling users to spend cryptocurrencies at merchants globally starting next year.
Legal Status of Bitcoin in China
Key Takeaway: Owning Bitcoin in China is legal, but with caveats.
Two pivotal documents outline China's stance:
1. 2013 Risk Notification on Bitcoin
Issued by China’s central bank and four other regulatory bodies, this notice classifies Bitcoin as a "specific virtual commodity"—legally equivalent to an intangible asset.
👉 Read the full regulatory framework here
Critical Excerpt:
"Bitcoin transactions, as online commodity trades, allow public participation at individuals’ own risk."
This implies a neutral stance: neither banning nor endorsing public involvement.
2. 2017 ICO Risk Announcement
This joint公告 (announcement) warned of risks like虚假资产 (fake assets) and投机炒作 (speculative bubbles) but didn’t prohibit individual investments.
Key Principle:
"What isn’t explicitly forbidden is permitted."
Practical Implications for Holders
- Asset Protection: Bitcoin is recognized as personal财产 (property) under Chinese law.
- Risk Responsibility: Users must self-assess risks when trading or holding.
FAQ Section
Q1: Can I freely trade Bitcoin in China?
A: While holding is legal, exchanges operating in China must comply with strict anti-speculation laws. Most platforms have shifted overseas.
Q2: Does China ban mining?
A: Yes. Since 2021, China has cracked down on cryptocurrency mining due to energy concerns.
Q3: Are crypto transactions taxed?
A: No explicit tax exists for个人 (individuals), but businesses may face capital gains taxes.
Q4: Can I use crypto for daily payments?
A: No. The 2017公告 prohibits using cryptocurrencies as legal tender.
👉 Explore compliant trading platforms
Final Thoughts
Bitcoin’s legal status in China hinges on its classification as a virtual commodity. While ownership isn’t criminalized, the lack of institutional support and evolving policies necessitate caution. Always prioritize regulatory updates and risk management.