The Supreme Court calls for "Legal Response to Cryptocurrency": Releases 3 Major Signals!

Original Author: Li Xinyi

Introduction

On February 24, 2026, the Supreme People’s Court held a press conference. When the head of the Civil Division II, Wang Chuang, introduced the year’s key work priorities, he said something impressive:

“Formulating judicial interpretations on civil compensation for insider trading and market manipulation in the securities market, and conducting in-depth research on judicial responses to new financial cases such as private equity funds and virtual currencies.”

Over the past decade, when people talk about cryptocurrencies and Chinese law, they often think of “fraud,” “pyramid schemes,” and “money laundering.” But today, it has been officially included in the Supreme Court’s annual work plan, alongside “securities markets” and “private equity funds.”

This signals something more profound than the literal meaning—

Cryptocurrencies are moving from being a major area of criminal activity to a new node of regulation in civil and commercial law.

In this article, I will interpret three signals behind this statement.

Signal 1: Identity Shift—From Illegal Subject to New Type of Property

In the past, if you had a dispute arising from cryptocurrency transactions and wanted to seek justice in court, you often faced an awkward situation: the court’s doors might not be open to you.

The two most common reasons for dismissal were:

“This matter is not within our jurisdiction”—the court might believe that disputes caused by cryptocurrency transactions do not fall within the scope of civil cases accepted by people’s courts, leading to outright dismissal.

“Your transaction is illegal, and the agreement is invalid”—the court might determine that cryptocurrencies do not have the same legal status as legal tender, and that the transaction between the plaintiff and defendant violates financial regulations, rendering the agreement invalid and the plaintiff’s claims unsupported.

Under such judicial environments, disputes related to cryptocurrencies became legal “unknowns.” You clearly felt you suffered losses or rights were infringed, but when you appeared in court, your claimed rights had no proper legal designation or basis.

The turning point came at the end of 2025.

In December 2025, the Supreme People’s Court issued the “Decision on Amending the ‘Regulations on Civil Case Causes’.” This decision took effect on January 1, 2026. It marked a milestone—adding “Disputes over Data and Virtual Network Property” as a first-level cause of action for the first time.

What does this mean?

Cryptocurrencies now have a “household registration”: from now on, in the court’s case registration system, cryptocurrencies, digital collectibles (NFTs), and online game equipment are all included under the category of “online virtual property.” They are no longer legally anonymous “black accounts.”

From “legality” to “resolution”: courts no longer focus on whether your transaction is legal as a precondition but recognize that once a dispute arises, it is primarily a property rights issue that requires legal resolution. The judicial door is officially open to such disputes.

In short, only when an issue becomes a legal matter can the court rule according to law. For all participants in Web3 and the crypto field, this undoubtedly lays a solid foundation for building a compliant moat.

Signal 2: Discretion Shift—From One-Size-Fits-All to Fine-Grained

If establishing the cause of action solves the problem of “whether to accept the case,” then the shift in judicial reasoning answers the question of “how to judge fairly.”

In recent years, cryptocurrency cases mainly followed a strict attitude of 2: resolutely cracking down on virtual currency speculation and rectifying chaos in virtual currencies, so related civil acts were deemed invalid, and losses borne by the parties. This all-or-nothing approach was straightforward but often failed to achieve fairness in complex disputes.

Starting in 2024, a series of more nuanced rulings appeared. Courts, while ruling a transaction invalid, began citing Article 157 of the Civil Code, considering factors such as the degree of fault and the trading positions of both parties, and proportionally allocating responsibility.

In a 2025 case in Yangpu District, Shanghai, the court adopted this approach: the entrusted wealth management relationship was invalid, but the defendant still needed to return part of the funds to the plaintiff and compensate for losses. The judge’s explanation was crucial—“an invalid contract does not automatically eliminate existing losses,” and fair distribution of compensation should be considered.

Moving from one-size-fits-all to proportional responsibility, judicial rulings are moving away from rigidity toward refinement. The phrase “in-depth research” from the Supreme Court confirms this trend: disputes over cryptocurrencies are being integrated into a more mature and detailed legal track.

Signal 3: Remedy Shift—More Comprehensive Judicial Responses

If establishing the cause of action solves the issue of “whether to accept the case,” and the reasoning shift answers “how to judge fairly,” then improving remedy channels addresses a more practical problem—can the money be recovered?

In the past, cracking down on illegal activities involving cryptocurrencies mainly relied on criminal measures. In the criminal field, the property attributes of cryptocurrencies have been somewhat recognized. In August 2025, the Supreme Court released typical cases, including one involving cryptocurrencies, pointing out that criminals use blockchain and cryptocurrencies to transfer and conceal criminal funds, with increasingly professional and covert methods, requiring judicial agencies to penetrate appearances and target precise strikes.

But the problem is: criminal action can arrest people but may not recover money. Many cases end with “people caught, but money gone, and public dissatisfaction remains”—the involved funds are either squandered or difficult to recover, leaving victims empty-handed.

This is another deeper meaning behind the Supreme Court’s statement.

As judicial responses to new financial cases involving virtual currencies continue to improve, future paths will become more diverse: beyond criminal accountability, civil compensation mechanisms are becoming an important supplement. Judicial concepts are quietly shifting—from “only cracking down” to gradually “both cracking down and compensating.”

For market participants, this means:

First, the remedy channels are more complete. The rights of the compliant and injured parties are protected in multiple ways, no longer limited to waiting for criminal restitution.

Second, the cost of violations is genuinely increased. The risk of exploiting loopholes is being re-evaluated. Risks are being reconstructed by the judiciary.

Conclusion

As the judge from Yangpu Court in Shanghai said: “Against the backdrop of ongoing risks from virtual assets, investors should establish a sense of responsibility that ‘risks are borne by oneself, and compliance is prioritized’… The judiciary’s steady response to crypto-related investment and financing activities helps guide the market toward rationality.”

This statement clearly highlights the core attitude: regarding cryptocurrencies, the judiciary is doing three things—acknowledging their existence, facing their disputes, and regulating their rulings.

The road ahead is long, but the direction is clear. Of course, several facts need to be recognized:

The establishment of new causes of action does not equate to legalization of transactions. Acceptance of cases does not mean protection.

Refined discretion does not mean risk exemption. More detailed rulings do not guarantee compensation if losses occur.

But the most important change is: when disputes arise, the court’s doors are no longer closed. Perhaps this is the essence of the rule of law—no encouragement, no indulgence, but also no avoidance.