The Nanchang People’s Court in China has issued a landmark ruling, stating that crypto lending falls outside the purview of the country’s legal system, marking the second such decision in recent months. The case involved an individual, Mr. Ming, who lent 80,000 Tether to Mr. Gang for stablecoin trading in April 2021, with a stipulation for repayment within six months. When Mr. Gang defaulted on the loan, Mr. Ming filed a lawsuit against him.
The court’s recent decision deemed it necessary for Mr. Ming to prove that Tether is a legally issued fiat currency to establish a valid cause of action for judicial relief. As Mr. Ming could not provide such proof, the court concluded that the lawsuit did not fall within the appropriate scope of civil litigation. Mr. Ming subsequently appealed the decision, which was also dismissed.
The presiding judge emphasized the legal risks associated with virtual currency investment and trading activities, particularly those that violate public order and customs. The ruling stated that civil legal actions related to these activities would be invalid, and any resulting losses would be the responsibility of the parties involved.
This ruling is in line with China’s strict stance on cryptocurrencies, which have been prohibited in the country since late 2021 due to environmental concerns and regulatory issues. In a similar ruling from August, the Changzhou Zhonglu People’s Court invalidated a $10 million Bitcoin lending agreement, citing the lack of judicial relief for the lender as cryptocurrency activities are considered illegal in China.
ALSO READ
- Coinbase Launches Crypto Lending Platform for Institutional Investors
- Thailand's New Crypto Regulations Target Lending Services
- UK Treasury seeks input on taxing DeFi staking and lending