Virtual Currency-Based Sale Agreement an Invalid Contract, Chinese Court Rules – A virtual currency cannot circulate in the market as a currency, hence a vehicle sale contract in which the buyer agreed to pay in privately issued digital money is invalid, according to a Chinese court. A virtual currency, according to the court, does not have the same legal validity as national fiat currency.
A Chinese court has found that a vehicle sale contract in which the parties agreed that the buyer would pay in virtual currency breached obligatory legal and administrative provisions and is thus void. A virtual currency, according to the court, “cannot be distributed in the market as a currency.”
Also Read: Kazakhstan Allows Registered Crypto Exchanges to Open Accounts at Local Banks
According to one Chinese language report, the Shanghai court’s decision came after a dissatisfied vehicle buyer requested the court’s help. In May 2019, a buyer identified as Huang signed a sale agreement with Shanghai Automobile Service Co Ltd, according to the report.
Huang agreed to buy an Audi sports car “with Yurimi as a currency payment” as part of the deal. The seller was supposed to deliver the automobile after receiving 1,281 units of Yurimi virtual currency, according to the agreement. Huang sought redress through the Shanghai Fengxian Court when the seller failed to deliver.
Huang argued in court that Yurimi is a virtual commodity that can be exchanged for products, and as such, it “does not violate the restrictive rules and should be legitimate.” Shanghai Automobile Service Co Ltd, on the other hand, argued that the sale agreement is an invalid contract that should not be protected by the law.
The Shanghai Fengxian Court said in its ruling that the country’s token issuance and finance regulations, which were implemented in 2017, stipulate that tokens or “virtual currency” used in token issuance financing are not issued by monetary authorities, and thus lack attributes such as “legal compensation and compulsion.”
Also Read: South Korean Government Calls for Voluntary Regulations From Crypto Industry
Additionally, according to the report, virtual currency does not have the same legal status as national fiat currency. As a result, they “cannot and should not be circulated as a currency on the market.”
Huang, who was dissatisfied with the verdict, filed an appeal with Shanghai No. 1 Intermediate Court, according to the report. The superior court, however, after hearing Huang’s appeal, decided to uphold the lower court’s decision.
