Shanghai High People's Court: Owning Cryptocurrency is Not Illegal for Individuals, but Issuing Tokens is Illegal

BlockBeats News, November 21st, according to Sina Finance, recently, the People's Court of Songjiang District, Shanghai (hereinafter referred to as the Songjiang District People's Court), concluded a service contract dispute case caused by the effectiveness of a virtual currency issuance financing service contract.

The plaintiff, a certain agricultural development company (hereinafter referred to as Company X), conceived the idea of issuing a virtual currency and fundraising during an ICO in 2017. At the recommendation of the defendant, a certain investment management company (hereinafter referred to as Company S), they signed a "Blockchain Incubation Agreement" with Company S, entrusted Company S to create a 'White Paper', and based on mainstream blockchain smart contract technologies such as Bitcoin and Ethereum, conducted token issuance on the blockchain.

However, a year later, the tokens were still not issued. When X Company inquired, S Company stated at this time that issuing the tokens required the prior development of a corresponding APP, and the cost of developing the APP was high and not within their service scope. X Company was required to develop the APP on its own, and S Company was only responsible for the subsequent token issuance. X Company's expectations were shattered, leading to a lawsuit filed in the People's Court, requesting the contract to be terminated and S Company to return the service fee of 300,000 RMB.

The judge of the Songjiang District People's Court responsible for this case stated that virtual currency, as a virtual commodity, has monetary value, and individuals holding virtual currency themselves are not illegal. However, commercial entities cannot arbitrarily participate in virtual currency investment transactions or even issue tokens on their own.