Over the past few days, many foreign media and foreign groups on Wechat have reported that China has allegedly criminalized cryptocurrency and mining since March 1, 2022, but is this really true? Let's look at this question from Chinese sources, as reported in Chinese legal WeChat groups.
On February 24, 2022, the Supreme People's Court of China adopted the "Decision on Amending the Interpretation of the Supreme People's Court on Certain Matters Concerning the Special Application of the Law in Criminal Cases of Illegal Fundraising", which amended Article 2, paragraph 8, namely : "Illegal takeover of funds through stock holdings, virtual currency transactions, etc."
The relevant person from the Supreme Court explained that: based on the original provisions of the revised interpretation, in combination with new jurisprudence and new forms of crime, online lending and virtual currency transactions were added to paragraphs eight and nine of Articles respectively, financial leasing and other new forms misappropriation of funds, and along with the addition of "Illegal collection of funds through the provision of "services to the elderly", investing in "projects for the care of the elderly" and the sale of "products for the elderly" as a tenth item, through shareholding , operations with virtual currency, etc.
That is, the main criterion for classifying cryptocurrency transactions as illegal in China is precisely “illegal collection of funds in the form of cryptocurrency”, but is not “all transactions with cryptocurrency”.
How to identify illegal fundraising?
The relevant person in charge of the Criminal Court explained that: after the revision of the "Interpretation", the four identification elements remain unchanged, and in accordance with the relevant legal provisions and jurisprudence, the first and second paragraphs of the first paragraph of this article are accordingly amended. The four criteria for "illegal transactions" with cryptocurrencies in China are as follows:
(1) Absorption of funds without the legal permission of the relevant departments or by borrowing the form of legitimate business transactions;
(2) Illegal publicity through the Internet, mass media, promotional conferences, flyers, mobile phone information, etc.;
(3) Commitment to repay principal and interest or pay income in currency, physical objects, capital, etc. within a specified period of time;
(4) Absorption of funds from the population, that is, from unspecified social objects.
Are ordinary cryptocurrency transactions included in illegal fundraising?
Attorney Liu Yang's interpretation: Essentially, virtual currency transactions as we usually understand them refer to currency transactions, legal currency transactions, contract transactions, etc. These virtual currency transactions do not meet the constituent elements of the crime of illegal fundraising , therefore, they cannot be subject to criminal interpretation. Of course, the non-applicability of this judicial interpretation does not mean that it is inconsistent with other criminal constitutions, such as over-the-counter conduct, which would most likely constitute the crime of aiding a trust or the crime of concealing the proceeds of crime and the proceeds of crime.
Will illegal fundraising include fundraising, ICOs, money management, etc. that only involve transactions in cryptocurrencies (no legal currency)?
It's a difficult question.
Lawyer Ho Yijie noted that in the past, it was difficult to bring a case against the above behavior at the ordinary court level. Obviously, this judicial interpretation is trying to expand the scope, but the future depends on whether it can be implemented.
Lawyer Han Wubing pointed out that there have been ICOs and other actions related only to cryptocurrencies in the jurisprudence, and illegal fundraising was used to initiate a case. This time, this behavior is pretty much clarified.
Lawyer Liu Yang noted that this judicial interpretation also clarified a key issue: in the crime of illegal fundraising, the nature of virtual digital currency is clearly defined as “funds” in the sense of criminal law, which is a major breakthrough. In the crime of illegal fundraising, the nature of virtual digital currency was clarified that with the increase in the number of cases of virtual digital currency in the past, “virtual digital currency has no legal compensation, is not property in the sense of criminal law.
According to a judicial interpretation released today, the Supreme People's Court has clarified that those who misappropriate funds through virtual currency transactions should be convicted of the crime of misappropriation of deposits and fundraising fraud. Thus, in relation to a virtual currency transaction, the police can conduct a criminal investigation against the issuer of the currency in accordance with the latest judicial interpretation.
Is the above change retroactive?
Lawyer Liu Yang pointed out that judicial interpretation is the interpretation of the original law, not the newly created law, so judicial interpretation is retroactive.