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China Recognizes Bitcoin As Legal Asset After 350% Appreciation. Country Holds 100,000 In Cryptocurrencies And Bitcoin’s Outlook Begins To Improve.
China surprised the financial market by removing the restrictions previously imposed on Bitcoin, marking a turnaround in its relationship with the cryptocurrency. After banning Bitcoin at least six times in recent years, the most recent being in September 2021, the cryptocurrency has recorded an impressive appreciation of 350% since then. Now, by officially recognizing Bitcoin, China signals a strategic shift that could significantly influence the global digital asset market. In this article, we analyze China’s trajectory regarding Bitcoin and the impact of this historic decision on the cryptocurrency landscape.
China Recognizes Bitcoin And Now Holds Over 100,000 Under Its Custody
Although China is one of the largest Bitcoin whales, the last time it banned it was in September 2021, when the People’s Bank of China declared all cryptocurrency transactions illegal. At that time, Bitcoin was valued at an average of US$ 20,000, having appreciated more than 350% with this latest rise.
However, it is worth mentioning that despite constantly banning the technology, the Chinese government holds over 100,000 BTC under its custody, acquired from seizures. Thus, the turnaround occurred on the 18th, in a decision from the Supreme Court of China regarding token issuance (ICOs). The document clearly classified Bitcoin as a “commodity.”
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The case is linked to a dispute between two companies that, together, planned to launch their own token in 2017. The outcome was not favorable for the company since cryptocurrencies have remained banned since the beginning of the case.
After analysis, the court deemed that the issuance of tokens for funding, through the unauthorized sale and circulation of digital tokens, is an illegal practice of fundraising.
Commercial Activities Related To Bitcoin Are Restricted
However, the legal rationale behind the decision was what caught attention. Subsequently, the ruling concluded that “cryptocurrencies, like Bitcoin, are not prohibited by law.” In the view of Chinese journalist Colin Wu, it is a clear indication of the legal evolution of the country regarding the industry.
According to Wu on his X profile, formerly Twitter, the Supreme Court of Shanghai in China recognizes Bitcoin and states that the virtual currency, as a virtual commodity, has property attributes and is not prohibited by Chinese law.
However, commercial activities related to the virtual currency are strictly restricted, and Chinese laws and regulations have always maintained high-pressure repression on speculative activities in virtual currency trading.
David Bailey, CEO of Bitcoin Magazine, stated that Donald Trump was elected in the United States promising to create a strategic reserve of cryptocurrencies. According to Bailey, when he met the president, the first thing he asked was whether Bitcoin could do anything regarding the 35 trillion dollars in debt. However, the executive did not elaborate on this with Trump.
China Now Recognizes Bitcoin As A Legal Asset And Cryptocurrency Appreciates
Bitcoin started the week on a high note. Just this Monday (14), the cryptocurrency has accumulated an appreciation of over 4%, according to data from the CoinGecko platform, reflecting a greater risk appetite from investors after the Chinese government officially announced a trillion-dollar stimulus plan for the country’s economy.
According to CoinGecko, Bitcoin surged 4.1% in the last 24 hours, trading at US$ 65,173. The strong performance also positively influences other cryptocurrencies, with Ether appreciating 4.3% in the same period, at US$ 2,567. Meme cryptocurrencies are both among the positive and negative highlights of the day.
João Galhardo, analyst at Mynt, the crypto platform of BTG Pactual, points out that since last Thursday, the 10th, Bitcoin’s appreciation is even greater. On that day, the asset fell to a low of US$ 59,330; however, it reversed the trend over the last weekend.
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