Original Author: Li Xinyi

Introduction

On February 24, 2026, the Supreme People's Court held a press conference. Wang Chuang, president of the Civil Division II, made an impressive statement while introducing the key work priorities for the year:

“To formulate judicial interpretations of civil compensation for insider trading and market manipulation in the securities market, and to deeply study judicial responses to new types of financial cases such as private equity funds and virtual currencies.”

In the past decade, when discussing cryptocurrency and Chinese law, people often associated it with “fraud,” “pyramid schemes,” “money laundering”. Today, it has been formally incorporated into the Supreme Court's annual work plan, standing alongside “securities market” and “private equity funds.”

This sends a signal that is more profound than its literal meaning——

Cryptocurrency is transitioning from a hotspot of criminal activity to a new node of civil and commercial regulation.

In this article, I will interpret the three-fold signals released behind this statement.

Signal One: Change of Identity——From Illegal Objects to New Types of Property

In the past, if you encountered a dispute due to cryptocurrency trading and wanted to seek legal protection in court, you often faced an awkward situation: The doors of the court might not be open to you.

The two most common reasons for dismissal were:

• “This matter is not under our jurisdiction”—— The court might believe that disputes arising from cryptocurrency transactions do not fall within the scope of civil litigation accepted by the People's Court and directly rule to dismiss the case.
• “Your transaction is illegal, and the agreement is invalid”—— The court might determine that cryptocurrency does not have the same legal status as fiat currency, and the transactions between the plaintiff and defendant violate financial regulations, thus rendering the transaction agreement invalid, and the plaintiff’s claims could not be supported.

In such a judicial environment, disputes related to cryptocurrency became nameless lawsuits under the law. You clearly felt you suffered losses and had rights infringed, but when you stood in court, the rights you claimed had no appropriate name or foundation under the law.

A turning point occurred at the end of 2025.

In December 2025, the Supreme People's Court announced the "Decision on Amending the Regulations on the Causes of Civil Cases," which officially came into effect on January 1, 2026. This amendment has milestone significance——for the first time adding "data and network virtual property disputes" as a primary cause of action.

What does this mean?

• Cryptocurrency has gained “citizenship”: From now on, in the court's case registration system, cryptocurrency, digital collectibles (NFTs), and online game equipment have been included under the category of “network virtual property.” They are no longer legally ambiguous “black households.”
• From “legal or illegal” to “how to resolve”: Courts no longer struggle with the legality of your trading actions, but instead recognize—— once a dispute arises, it is primarily a property rights issue that needs legal resolution. The judicial door is officially opened to these types of disputes.

In short, only by first becoming a legal matter can the court judge it by law. For all participants in the Web3 and cryptocurrency fields, this undoubtedly forms the most solid foundation for building compliance moats.

Signal Two: Change of Discretion——From One-Size-Fits-All to Fine-Tuning

If establishing a cause of action resolved the question of “can a case be filed,” then the shift in judgment logic answers the question of “how to judge fairly”.

In recent years, cryptocurrency cases have primarily been handled with a rigid attitude, resolutely cracking down on speculative virtual currency trading and correcting the chaos around virtual currencies, leading to the view that related civil actions are invalid and that losses should be borne by the parties themselves. While this one-size-fits-all approach is straightforward, it often fails to achieve true fairness in complex disputes.

Starting in 2024, a set of more refined judgments began to appear. While affirming the invalidity of transactions, the courts started invoking Article 157 of the Civil Code, considering factors such as the degree of fault of both parties and their positions in the transaction, and determining a proportional allocation of responsibility.

In a 2025 case in the Yangpu District of Shanghai, the court adopted this approach: The entrusted financial management relationship is invalid, but the defendant still needs to return part of the funds to the plaintiff and compensate for the losses. The judge's explanation was crucial——“Invalidation of the contract does not automatically eliminate established losses,” and reasonable distribution of the compensation ratio is required under the principles of fairness.

From one-size-fits-all to proportional allocation of responsibility, judicial rulings are moving away from rigidity towards refinement. The Supreme Court's mention of “in-depth research” is a confirmation of this trend: Disputes involving cryptocurrency are being incorporated into a more mature and detailed rule of law track.

Signal Three: Change of Relief——More Comprehensive Justice

If establishing a cause of action resolved the can a case be filed issue, and the change in judgment logic answered how to judge fairly, then the improvement of relief mechanisms addresses a more practical question——can the money be recovered.

In the past, criminal measures were the primary breakthrough in combating currency-related illegal activities. In the criminal domain, the property attribute of cryptocurrency has already been recognized to some extent. In a typical case released by the Supreme Court in August 2025, there was a case involving cryptocurrency, pointing out that criminals use blockchain and cryptocurrency to transfer and conceal criminal funds, employing increasingly professional and covert techniques, and that judicial organs need to penetrate appearances and strike precisely.

But the problem is: while criminal enforcement can apprehend people, it does not necessarily lead to recovering funds. Many cases ultimately result in “people were arrested, money is gone, and public grievances still exist”—— the involved funds are either squandered or difficult to recover, leaving victims often empty-handed.

This is another layer of profound meaning behind the Supreme Court's statement.

As judicial responses to new types of financial cases, such as virtual currencies, continue to improve, future pathways will become more diversified: Beyond criminal accountability, civil compensation mechanisms are emerging as an important supplement. Judicial concepts are also quietly shifting—— transitioning from the past emphasis on “only prosecution” to gradually adopting “both prosecution and compensation.”

For market participants, this means two things:

• First, the avenues for relief have become more complete. The rights of compliant parties and affected parties have more dimensions of protection and are no longer reliant solely on criminal restitution.
• Second, the costs of illegal activities have genuinely increased. Various opportunistic mentalities are being reassessed. Risks are being reconstructed by the judiciary.

Conclusion

As a judge from the Yangpu Court in Shanghai pointed out: “In the context of ongoing risks from virtual assets, investors should establish a sense of responsibility that ‘risk is self-borne, compliance is a priority’... The judicial system's stable response to activities involving cryptocurrency investment and financing helps to guide the market back to rationality.”

This statement actually highlights the core attitude of the current situation: Regarding cryptocurrency, the judiciary is doing three things——acknowledging its existence, confronting its disputes, and regulating its judgments.

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

• The establishment of a new cause of action does not equate to the legalization of transactions. Being able to file does not imply protection.
• Fine-tuned discretion does not equate to risk elimination. More detailed judgments do not guarantee compensation for losses.

But the most significant change lies in: when a dispute arises, the doors of the court are no longer tightly shut. This perhaps embodies the meaning of the rule of law——neither encouraging nor condoning, but also not avoiding.

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