China Includes Virtual Currency Transactions Under Illegal Fundraising: What You Need to Know

China's hardline policy on crypto took another turn. Just In: For the first time, the Supreme Court of China has included virtual currency transactions in the judicial interpretation of illegal fundraising, which is mainly to... safeguard financial stability and prevent illicit activities. This landmark decision significantly impacts the future of crypto within the country.

China's Supreme Court ruled Thursday that some virtual asset transactions can constitute illegal fundraising, paving the way for judicial prosecution of the crypto industry. The implications are far-reaching for anyone involved in digital assets in or connected to China.

What's Changed? The Supreme Court's Decision Explained

On Thursday, China's Supreme People's Court added a number of illegal fundraising methods to the list in the Interpretation on Several Issues Concerning the Specific Application of Law in Handling Criminal Cases of Illegal Fundraising. In one of the amendments, item 8 of Article 2 encompasses “illegal fundraising by way of online lending, investment in shares, [and] virtual currency transactions.” This explicitly broadens the definition of illegal fundraising to include certain crypto-related activities.

Impact on Virtual Currency Activities

It’s noteworthy that the Decision includes raising public money through virtual currency as illegal fund-raising. It suggests that certain virtual currency-related offerings, exchanges, and promotional activities could now be subject to legal scrutiny and potential prosecution. This reinforces China's already strict stance against cryptocurrency trading and mining.

This ruling effectively clarifies the legal landscape, making it clear that certain activities involving virtual currencies fall under the umbrella of illegal fundraising. The move is expected to further curtail the already limited crypto ecosystem within China.