China’s Supreme Court recognizes the legality of using crypto to repay debt under certain conditions

A major step forward for China towards crypto is recognizing the use of crypto to repay debt in some cases.

As reported by Wu Blockchain on May 7, the guidelines of the Supreme Court of China state that the settlement of a debt using a small amount of digital assets will be considered legal if both sides agree.

Accordingly, contracts related to Bitcoin mining and cryptocurrency investment by the agent are considered invalid; Contracts involving crypto-debts are considered valid. However, the ruling emphasizes that this approach will only be final if there is no other way.

The court ruling also clarified that if one party agrees to transfer the cryptocurrency to another, but the receiving party is unable to complete the agreement due to policy restrictions, the court will determine compensation based on the actual value of the funds. of the property accepted by the acceptor at the conclusion of the contract.

This is especially significant as it shows that the regulation of the crypto sector in China has gradually loosened following the strict bans on cryptocurrencies. It also indicates that the Chinese government is taking a softer approach to digital asset regulation, rather than simply maintaining a full-blown ban.

However, it is important to note that the ruling only applies to a small amount of digital assets used to settle debts arising from exchanges, labor services, and institutional relationships. other version. This means that larger transactions or more complex uses of digital assets may still be subject to the existing ban.