Henan Province in China Declines Local Legislation on Digital Currency Disposal

Henan Province in China announced that it will not pursue local legislation regarding the disposal of virtual currencies involved in criminal cases. The decision was outlined in the review report of the "Henan Province Regulations on the Management of Case-Related Property (Draft)" issued by the provincial legislature. This marks a significant stance on how virtual currencies should be managed within the judicial system.

The report highlights the challenges surrounding the handling of confiscated virtual currencies. Henan's Legislative Affairs Committee concluded that virtual currencies possess property attributes and are considered case-related assets, a view that has gained consensus in judicial practice. However, given China's comprehensive ban on virtual currency trading and the absence of legal trading platforms, the proper disposal of such assets remains an area of exploration. The committee emphasized that national-level regulations would be more appropriate for managing these new types of assets, rather than relying on fragmented local legislation.

China has maintained strict control over virtual currency activities, banning trading and mining operations to curb financial risks and energy consumption. This approach has led to the development of a state-controlled digital currency, the Digital Yuan, which serves as the only legal digital payment method in the country. Henan's decision aligns with the broader national policy, ensuring consistency across provinces.

Legal experts and industry observers have noted that this move reflects the challenges posed by virtual currencies in law enforcement and asset management. It also underscores the importance of unified regulations at the national level to address emerging legal and financial complexities. As the Ministry of Public Security continues to study relevant systems, Henan's stance may influence other provinces facing similar issues.