Original author: Li Xinyi

introduction

On February 24, 2026, the Supreme People's Court held a press conference. Wang Chuang, the presiding judge of the Second Civil Division, made a memorable statement when introducing the annual work priorities:

"Formulate judicial interpretations on civil compensation for insider trading and market manipulation in the securities market, and conduct in-depth research on judicial response measures for new types of financial cases such as private equity funds and virtual currencies."

Over the past decade, when people talked about cryptocurrencies and Chinese law, they often associated them with "fraud," "pyramid schemes," and "money laundering." Today, however, it has been officially included in the Supreme People's Court's annual work plan, appearing alongside "securities market" and "private equity funds."

The message conveyed is far more profound than its literal meaning—

Cryptocurrencies are transitioning from a hotbed of criminal activity to a new stage of civil and commercial standardization.

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

Signal 1: A Change in Identity – From Illegal Targets to New Types of Property

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

The two most common reasons for rejection are:

"This is not our jurisdiction" — The court may believe that disputes arising from cryptocurrency transactions do not fall within the scope of civil litigation accepted by the people's courts, and directly rule to dismiss the lawsuit.
"Your transaction is illegal and the agreement is invalid" — The court may determine that cryptocurrency does not have the same legal status as fiat currency, and that the transaction between the plaintiff and the defendant violated financial regulations. Therefore, the transaction agreement is invalid, and the plaintiff's claims will naturally not be supported.

In this legal environment, cryptocurrency-related disputes become legally anonymous . You may feel that you have suffered losses and your rights have been violated, but when you stand in court, the rights you are asserting do not even have a proper name or basis in law.

The turning point came at the end of 2025.

In December 2025, the Supreme People's Court issued the "Decision on Amending the Provisions on Causes of Action in Civil Cases," which officially came into effect on January 1, 2026. This amendment is of milestone significance— for the first time, "disputes involving data and virtual property on the internet" were added as a first-level cause of action.

what does that mean?

Cryptocurrencies have gained official recognition: From now on, in the court's case registration system, cryptocurrencies, digital collectibles (NFTs), and online game equipment are all included in the category of "online virtual property." They are no longer legally unregistered "blacklisted" entities.
From "legality" to "how to resolve": The court no longer focuses on the preliminary question of whether your transaction is legal, but instead acknowledges that once a dispute arises, it is primarily a property rights issue that requires legal resolution. The doors of the judiciary are now officially open to such disputes.

In short, only when something becomes a legal matter can the court make a judgment according to law. For all participants in the Web3 and crypto space, this is undoubtedly the most solid foundation for building a compliance moat.

Signal Two: A Shift in Discretion – From One-Size-Fits-All to Refined Approach

If establishing the cause of action resolves the question of "whether a case can be filed," then the shift in judicial logic answers the question of "how to make a fair judgment."

In recent years, cryptocurrency cases have primarily relied on the stance of "2," which firmly cracks down on virtual currency trading and speculation, and aims to rectify the chaos in the virtual currency market. Therefore, related civil actions are deemed invalid, and losses are borne by the individuals involved. While this one-size-fits-all logic is straightforward, it often fails to truly achieve fairness in individual cases when faced with complex disputes.

Starting in 2024, a number of more refined precedents emerged. While ruling that transactions were invalid, courts began to cite Article 157 of the Civil Code, taking into account factors such as the degree of fault of both parties and their respective positions in the transaction, and determining that both parties should bear responsibility proportionally.

In a 2025 case in Yangpu District, Shanghai, the court adopted this approach: the entrusted financial management relationship was invalid, but the defendant was still required to return part of the funds to the plaintiff and compensate for losses. The judge's explanation was crucial—"the invalidity of the contract does not automatically eliminate the existing losses," and the compensation ratio needs to be reasonably allocated under the principle of fairness.

From a one-size-fits-all approach to proportional liability, judicial rulings are moving away from rigidity and towards refinement. The Supreme People's Court's recent statement of "in-depth research" confirms this trend: cryptocurrency disputes are being brought into a more mature and detailed legal framework.

Signal Three: A Shift in Remedies – A More Comprehensive Judiciary

If establishing the cause of action resolves the question of whether a case can be filed , and the shift in judicial logic answers how to make a fair judgment , then improving the remedies directly addresses a more practical question— whether the money can be recovered .

In the past, criminal prosecution was the main approach to combating cryptocurrency-related crimes. In the criminal field, the property attributes of cryptocurrencies have already gained some recognition. In August 2025, the Supreme People's Court released a series of typical cases involving cryptocurrencies, pointing out that criminals are increasingly sophisticated and covert in using blockchain and cryptocurrencies to transfer and conceal criminal funds, requiring judicial organs to see beyond the surface and target them precisely.

The problem is that criminal prosecution can arrest people, but it may not be able to recover the money. Many cases end up with "people arrested, money gone, and public resentment still lingering"—the funds involved are either squandered or difficult to recover, and the victims often end up empty-handed.

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

As judicial responses to emerging financial cases involving virtual currencies continue to improve, future approaches will become more diversified: in addition to criminal prosecution, civil compensation mechanisms are becoming an important supplement. Judicial philosophy is also quietly shifting—from simply "punishing" to "compensating for both."

For market participants, this means two things:

First, the avenues for redress are more comprehensive . The rights and interests of the party upholding the contract and the party suffering losses are protected in more ways, and they are no longer left with only criminal restitution.
Second, the cost of breaking the law has genuinely increased . The侥幸心理 (a mentality of taking chances) of trying to exploit loopholes is being re-evaluated. Risk is being restructured by the judiciary.

Conclusion

As a judge from the Yangpu District Court in Shanghai stated, "Against the backdrop of the continued spillover of risks from virtual assets, investors should establish a sense of responsibility of 'bearing their own risks and prioritizing compliance'... The prudent response of the judiciary to investment and financing activities involving cryptocurrencies will help guide the market back to rationality."

This passage actually highlights the most crucial attitude at present: the judiciary is doing three things regarding cryptocurrencies—acknowledging their existence, addressing their disputes, and regulating their adjudication.

The road ahead is long, but the direction is clear. Of course, there are a few facts we need to be aware of:

The establishment of a new cause of action does not equate to the legalization of the transaction. Being able to file a case does not guarantee protection.
More meticulous judgment does not equate to risk elimination. More detailed assessment does not guarantee compensation if losses are incurred.

But the most important change is that the courts are no longer closed when disputes arise. This is perhaps the meaning of the rule of law—it neither encourages nor condones wrongdoing, but it also does not shy away from it.

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