Chinese Court Discredits Crypto Lending in Landmark Ruling

A Chinese court has ruled that crypto lending is illegal and falls outside the purview of civil litigation.

Three prisoners are standing behind a red pile of digital yen.
  • China has invalidated crypto lending.
  • A court has discredited virtual currencies twice.
  • Users cautioned that there is no legal remedy for crypto-related disputes.

Authorities in China seem steadfast in limiting the use of digital assets in its entirety despite the country being one of the largest crypto markets in the world.

For the second time, a Chinese court has ruled that crypto lending is an activity outside the scope of civil litigation and clarified that virtual currency shouldn’t be mistaken for digital renminbi (RBM), the country’s central bank-issued digital currency (CBDC), also abbreviated as e-CNY.

Crypto Lending Invalidated

In a press release dated October 9, the Nanchang People’s Court issued a follow-up statement on its previous landmark ruling, affirming that crypto-related activities are illegal and “harm” national financial order, security, and social public interests.


Earlier in the week, the court dismissed an appeal by Xiao Ming (pseudonym), who had sued the defendant over a defaulted crypto loan worth more than 80,000 USDT.

In its first ruling, the court noted that it was Ming’s onus to prove that USDT is a legally issued currency in China to warrant a cause of action for judicial relief, something that he couldn’t, prompting the judge to dismiss the case.

Unsatisfied with the initial court decision, Ming filed an appeal, which was also dismissed, with the judge upholding the previous ruling.


“At the time of prosecution, it was not proven that the USDT involved in this case was a currency publicly issued in accordance with the law, so it was not legally compensable. The resulting litigation does not fall within the scope of civil litigation accepted by the People's Court.” The judge said.

Notably, the judge held that designated bodies do not operate virtual currencies and are irredeemable to the public, making them illegal.

China’s Blanket Ban on Crypto

China enacted a blanket ban on crypto in late 2021 over various concerns, including a lack of surveillance and environmental hazards.

In the press statement, the judge cautioned users about the legal risks associated with crypto investment and trading in China, reiterating that any losses emanating from such activities, which defy “public order and good customs,” shall be borne by them.

As China is fighting crypto, it’s betting big on Web3. Read more:
China Bets Big on the Metaverse with Three-Year Action Plan

Stay updated on a Chinese court ruling on Bitcoin:
Bitcoin Achieves Landmark Recognition in Shanghai Court

This article is for information purposes only and should not be considered trading or investment advice. Nothing herein shall be construed as financial, legal, or tax advice. Trading forex, cryptocurrencies, and CFDs pose a considerable risk of loss.

Brian Danga

Brian Danga, a Kenyan crypto reporter, is dedicated to delivering breaking news and updates from the cryptocurrency world. With a background as a Web3 writer and project manager, he recognizes the importance of unbiased reporting. Holding an LLB degree from the University of Nairobi, Brian's analytical skills contribute to his accurate news reporting. His personal interests include cooking, watching documentaries, reading, and engaging in intellectual discussions.