The age-old saying goes: “What’s borrowed must be repaid.” Most people are familiar with the concept of personal loans. Yet in the world of cryptocurrency, this seemingly straightforward principle often runs into legal gray areas and enforcement challenges.
Recently, a client approached us with a common but complex issue: a friend had urgently needed USDT (Tether) for a derivatives trading position and asked to borrow it, promising to return the funds within an agreed timeframe. After repeated delays and excuses, the borrower stopped responding altogether. Frustrated by failed attempts to recover the digital assets, the client turned to the legal system—only to be denied立案 (case acceptance) in multiple jurisdictions, including the lender’s residence, the borrower’s workplace, and even their hometown.
So, can you legally recover lent cryptocurrency through the courts? And if so, how? Let’s dive into the current state of digital asset lending under Chinese law.
Is Cryptocurrency Lending Legally Enforceable?
When attempting to sue someone over unpaid virtual currency loans, the first hurdle is often case acceptance. In many instances, courts refuse to hear such disputes—not because they’ve ruled on the merits, but because they claim these cases fall outside the scope of civil litigation.
Our research reveals that courts in Kunming, Yunnan, Baishan, Jilin, Beijing, Xi’an, Shaanxi, and Changzhou, Jiangsu have all previously dismissed or refused to accept cases involving cryptocurrency repayment claims. The reasoning is typically consistent: virtual currency disputes are not considered civil matters under current jurisdiction.
👉 Discover how courts are starting to treat crypto loans as enforceable debts.
However, this does not mean all hope is lost. While some courts reject these cases outright, many others have moved forward with full hearings. Judicial practice across China remains deeply fragmented—even within the same province. For example:
- In one case from Baicheng, Jilin, an appellate court ruled that disputes involving Bitcoin repayment do fall under judicial jurisdiction, overturning a lower court's dismissal and ordering a retrial.
- Meanwhile, in Baishan, Jilin, another court dismissed a similar case entirely, citing lack of civil jurisdiction despite prior rulings at trial level.
This contradiction highlights a critical takeaway: if your case is rejected at the filing stage, appeal. Submitting an appeal to the higher court may open the door to substantive review. A rejection at first instance doesn’t necessarily reflect final legal standing—it may simply reflect procedural hesitation or regional inconsistency.
How Do Courts Handle Crypto Lending Disputes?
Once a case clears the initial filing barrier, the next question becomes: how will the court rule? Legal outcomes depend heavily on how judges interpret existing regulations and classify cryptocurrency.
Under Chinese law, virtual currencies like Bitcoin and USDT are not legal tender, as clarified by multiple joint notices from the People’s Bank of China and other regulatory bodies. However, these documents also acknowledge that digital assets possess certain property-like attributes—especially when used in investment or trading contexts.
As a result, several courts—including in Beijing and Shanghai—have recognized Bitcoin and other major cryptocurrencies as virtual property subject to civil protection. This means:
- Lending agreements involving crypto can be treated similarly to traditional loan contracts.
- Courts may order borrowers to return the exact amount of cryptocurrency borrowed—or compensate in fiat based on market value at the time of default.
- Evidence of agreement (e.g., chat logs, transaction records, repayment terms) plays a decisive role in determining liability.
In notable cases such as:
- Beijing’s (2022) Jing 01 Min Zhong No. 5972
- Shanghai’s (2020) Hu 0113 Min Chu No. 23704
courts upheld claims for return of digital assets, reinforcing the idea that crypto has tangible economic value deserving legal recognition.
👉 See how blockchain evidence is being used in real court rulings today.
Why Are Rulings So Inconsistent?
You might wonder: why do different courts reach opposite conclusions on seemingly identical facts? There are three primary reasons:
1. Fact-Specific Legal Relationships
Even if two cases involve "lending Bitcoin," their underlying legal nature may differ:
- Was it a pure loan agreement?
- Or was it disguised investment, gambling, or illegal financial activity?
Courts scrutinize intent and context closely. If any part of the transaction violates public order or regulatory bans (e.g., crypto mining or speculative trading), the entire claim may be invalidated.
2. Lack of Unified Legislation
China lacks comprehensive laws governing virtual assets. While central bank notices provide guidance, they don’t constitute binding statutes. This leaves judges with wide discretion in interpreting whether:
- Crypto lending violates public policy
- Digital tokens qualify as protected property
- Contractual obligations should be enforced
Without clear statutory rules, judicial outcomes become highly dependent on individual court philosophies and regional precedents.
3. Evolving Judicial Attitudes
Judicial understanding of blockchain technology and digital finance is still maturing. Some courts take a cautious approach due to regulatory warnings; others recognize the need to protect legitimate private rights in Web3 environments.
Over time, as more cases emerge and legal scholarship develops, we expect greater consistency in rulings—potentially leading to national-level judicial interpretations or even new legislation.
Key Legal Recommendations for Crypto Lenders
Despite current inconsistencies, there are steps you can take to strengthen your position if lending cryptocurrency:
- Document Everything: Maintain clear records of all communications—especially agreements about amounts, repayment dates, interest (if any), and purpose.
- Use On-Chain Transparency: Send funds via traceable wallet addresses and keep transaction hashes (TXIDs). Blockchain data is increasingly accepted as evidence.
- Avoid Prohibited Uses: Never lend crypto for activities banned under Chinese policy (e.g., margin trading, mining, or overseas exchanges).
- Seek Legal Advice Early: Consult professionals familiar with fintech law before escalating disputes.
- File Strategically: If rejected in one jurisdiction, consider appealing or exploring alternative venues where precedent favors enforcement.
Courts in cities like Beijing and Shanghai have shown increasing willingness to treat crypto as recoverable virtual property—especially when loans are clearly documented and non-speculative.
Frequently Asked Questions (FAQ)
Q: Is lending Bitcoin legally binding in China?
A: While not regulated like traditional money, courts in several regions—including Beijing and Shanghai—have recognized cryptocurrency loans as enforceable if properly documented and not tied to illegal activities.
Q: Can I sue someone for not returning my USDT?
A: Yes, but success depends on jurisdiction and evidence. Some courts accept such cases; others reject them initially. Strong documentation improves chances of winning.
Q: Will the court order repayment in crypto or cash?
A: It varies. Some rulings require return of the original coins; others award equivalent RMB value at the time of breach.
Q: What evidence is needed for a crypto loan dispute?
A: Chat logs showing agreement terms, wallet transaction records (with TXIDs), timestamps, and any repayment promises are crucial.
Q: Are verbal crypto loan agreements valid?
A: Difficult to prove. Written or digital records (WeChat, email) carry far more weight in court than oral understandings.
Q: Can I get compensation for lost gains if crypto price rises after default?
A: Unlikely. Most courts only award return of principal or its value at default—not speculative profits.
👉 Learn how secure wallets and smart contracts can prevent future disputes.
While challenges remain, the legal landscape for cryptocurrency lending is gradually shifting toward greater recognition of digital asset rights. With proper precautions and strategic legal action, recovering lent crypto is becoming increasingly possible—even in today’s uncertain regulatory environment.