A virtual currency cannot be circulated in the market as a currency, therefore a vehicle sale contract wherein parties agreed that the buyer would pay with a privately issued digital currency is invalid, a Chinese court has ruled. The court asserts that a virtual currency does not have the same legal status as national fiat currency.
In its ruling, the Shanghai Fengxian Court said the country’s token issuance and finance regulations that were implemented in 2017 stipulate that tokens or “virtual currency” used in the financing of token issuance, are not issued by monetary authorities hence they lack attributes such as “legal compensation and compulsion.”
In addition, such virtual currency does not have the same legal status as national fiat currency, the report said. This, therefore, means they “cannot and should not be circulated in the market as a currency.”
According to the report, Huang, who was not pleased with the decision, went on to file an appeal with Shanghai No. 1 Intermediate Court. However, after reviewing Huang’s appeal, the superior court still ruled to uphold the lower court’s decision.
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