It is impossible for the virtual currency to be traded in the market as currency, so the car sale contract in which the parties agreed that the buyer will pay with a specially issued digital currency is invalid, a Chinese court has ruled.
The court asserts that the virtual currency does not have the same legal status as the national official currency.
A Chinese court has ruled that the car sale contract, under which the parties agreed that the buyer will pay in virtual currency, violates mandatory provisions of laws and administrative regulations and is therefore invalid according to the court.
As reported in a Chinese language, the Shanghai court ruling was issued after an aggrieved car buyer sought court intervention, and according to the report, a buyer identified as only Huang signed a sale agreement with Shanghai Automobile Service Co Ltd in May 2019.
As part of the agreement, Huang will purchase an Audi sports car “with Yurimi as payment in the currency.” Upon receiving 1,281 units of Yurimi’s virtual currency, the seller was expected, under the agreement, to deliver the vehicle. However, after the seller failed to deliver, Huang petitioned Equity by Shanghai Fengxian Court.
Can virtual currency be traded in the market as currency?
In arguing his case before the court, Huang insisted that Yurimi is a virtual commodity that can be exchanged for commodities and thus “does not violate the prohibitions and must be in effect”.
However in its counter-argument Shanghai Automobile Service Co Ltd insisted that the sales agreement was an invalid contract and therefore should not be protected by law.
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Virtual currencies lack legal compensation and coercion.” In its ruling, Shanghai Fengxian Court said: “The token issuance and funding regulations in the country implemented in 2017 stipulate that the tokens, or virtual currency used to fund the issuance of tokens, are not issued by monetary authorities and therefore It lacks features such as legal compensation and coercion.”
In addition, this virtual currency does not have the same legal status as the fiat national currency , according to this report, therefore, it means that it cannot and should not be traded in the market as a currency.
According to the report, Huang, who was not satisfied with the decision, appealed to the No. 1 Intermediate Court in Shanghai. However, after reviewing Huang’s appeal, the Supreme Court upheld the lower court’s decision.