Author: Yang Dong, Dean and Professor, Law School of Renmin University of China.

Abstract: The objective of the existing virtual currency regulatory policy is to safeguard financial order. Accordingly, civil cases involving virtual currencies should be categorized based on their impact on financial regulatory order. Virtual currencies transactions and investment activities that severely disrupt financial order shall be deemed invalid as a contravention of public order and good morals. However, transactions such as the mere exchange of virtual currencies, which do not affect financial order, may still be interpreted as valid. Where a relevant contract is rendered invalid, the provisions on restitution of property shall take precedence. If restitution is technically impossible or economically unnecessary, compensation at an estimated value shall apply. Conversely, when a contract is valid, based on the principles of fairness and good faith, as well as the technical characteristics of virtual currencies, civil norms governing scenarios such as the sale and purchase of virtual currencies and hard forks may be formulated by making partial reference to the rules applicable to tangible property. Concurrently, the rules governing infringement of online virtual property or the principle of unjust enrichment should be applied to strike an appropriate balance between protecting virtual currency holders and ensuring transaction security.

Keywords: digital assets; cryptocurrency; public order and good morals; unjust enrichment; invalidity of juristic acts.