Legal Framework of China's Response to Cryptocurrency: Evidence from Legislation and Judicial Adjudication

Abstract

The world's monetary system is changing dramatically, while currencies constitute the backbone of the financial system, the digital economy powered by computers, smartphones and the internet has given rise to crypto-currencies. InOctober 2022, the UK government in a bid to become a global centre for cryptotechnology and investment enable regulators to react faster developments in thefield, the House of Commons voted to allow the Treasury to regulate cryptocurrencies as financial instruments under the Financial Services and Markets Act2000 (FSMA).An executive order detailing the Biden administration's strategy for regulating crypto-currencies as financial instruments was released in the US. A measure enacted by Congress in 2021 that mandated additional reporting obligations for those engaged in significant cryptocurrency transactions went into the effect in January 2024. China is pushing the "Pilot of the Central Bank's Digital Currency" (DCEP) but has not yet acknowledged the currency status of virtual currencies such as Bitcoin. To adapt shifting times and settings, cryptocurrency policy and legal regulation must strike a balance between financial stability and innovation. This article examines how China's financial stability law can influence future regulatory reforms and the country's legal framework for dealing with crypto-currencies.Understanding China's unique cultural context is crucial for anticipating future regulatory reforms in the global cryptocurrency landscape.