Chinese Civil Code General Provisions Draft: Virtual Properties Like Bitcoin to be Protected by Law

BitKan    2016-06-28 15:16:00

With the publication of the Civil Code General Provisions Draft, virtual properties and data have officially become Chinese people’s rights, what this means is that cryptocurrencies e.g. Bitcoin, virtual currencies e.g. online gaming tokens and data information, e.g. Big Data, shall all be officially recognized as Civil Right Objects.

Yesterday(June 27th ), the session of the 12th National People’s Congress Standing Committee(China’s Congress or/and Senate) was held in Beijing. The session reviewed, for the first time, the illustration on the PRC Civil Code General Provisions(Draft) Proposal, which was brought to the floor by the Chairman Meeting of the NPC Standing Committee. Within the draft, we see articles on virtual properties and data information, classifying them as new type of civil right objects, this means that virtual properties and data shall officially become people’s rights.

There are 2 articles concerning virtual properties and data information. Article 104: Objects includes immovables and movables. Specific rights or virtual properties defined as property rights objects by the Law, shall be treated accordingly. Article 108.2.8: (Intellectual Properties includes)data information.

Previously, the Constitution and the General Provisions of Civil Law had blurred articles on virtual properties, but, left room for further clarification: the Amendment of the Constitution in 2004 explicitly confirmed the protection on citizen’s legal private properties. This term of legal private properties had left great room for the clarification of Civil Law Property. While in the Civil Law,“private properties of citizens include legal income, real estates, deposits, livelihood appliances, historical relics, books and materials, forests and woods, livestock, other means of production granted by laws and other legal properties.” Virtual properties were not explicitly defined as citizen’s legal properties, but the term“other legal properties” left room for further clarification.

Also, China Central Bank’s The Notification on Preventing Bitcoin Risk in 2013 also clarified bitcoin’s nature. The Notification addressed that bitcoin is not published by monetary authorities hence lacking currency nature such as law-enforced-compensation and enforceability, and concludes that bitcoin is not a true currency. From its nature, bitcoin is a certain type of virtual commodity. It does not enjoy the same status of a currency in law. It cannot and should not be circulated and used in the market like a currency. But, bitcoin transactions is an online transaction of commodities, ordinary citizen enjoy the freedom of participation on their own risks.

During recent years, legal battles on virtual properties increasingly emerged: Are the stolen bitcoins legally recognizable? How to define a stolen online account? How to protect people’s rights when their properties in the form of data information were leaked? For cases of these kinds, difficulties in obtaining evidence and blurred laws have led to their suspension. In incidents where mass accounts or gaming tokens were stolen, people could only resort to the corresponding gaming companies.

The official publication of Civil Code General Provisions Draft also opens new legal channels for the aforementioned problems.

But large sum of problems of virtual property rights’ protection still remain at hand, such as the pricing issue. Though exchanges of bitcoin and other virtual currencies operated by companies do exist, these companies are at large private start-ups. Their prices differentiate with each other and they lack credibility. Tencent’s Q-Bi is nothing but some digits stored in the computer and can be duplicated indefinitely, this puts a big question mark on its true value. Let alone the data information like Big Data, which can hardly be priced based on the market. For example, data of wheat and soybean could be applied to agricultural planning or to Futures trades. So their pricing varies tremendously in different application scenarios.

This also makes a fair compensation difficult in a legal battle of virtual properties.

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