A recent ruling by the Shenzhen Qianhai Cooperation Zone People’s Court in China has clarified that cryptocurrency cannot be used as a form of wage payment. This decision comes amidst increasing global discussions about the integration of digital assets in traditional financial systems.
Case Details
The dispute revolved around Zhou, a senior engineer who claimed his employer had agreed to pay part of his wages in USDT (a stablecoin pegged to the U.S. dollar). Zhou alleged that his salary package included 25,000 yuan in USDT alongside a 20,000 yuan bank transfer. However, his employer denied any formal agreement to pay wages in cryptocurrency, leading to a legal battle.
Court's Findings
Legal Tender Requirement: The court referenced a 2021 government notice that declared cryptocurrency does not hold the legal status of fiat currency in China. According to Chinese labor laws, wages must be paid in legal tender, and agreements involving crypto payments are unenforceable.
Public Policy Violation: While the court acknowledged the potential value of cryptocurrencies, it ruled that their use as a wage payment standard violates public policy and existing financial laws.
Insufficient Evidence: Zhou failed to provide sufficient proof that crypto payments were formally included in his employment contract, leading the court to rule in favor of the employer.
Appeal and Final Ruling
Zhou appealed the decision, but the Shenzhen Intermediate People’s Court upheld the original ruling. Judge Zhao Junjun warned employers and employees alike to avoid incorporating cryptocurrencies into wage agreements, emphasizing that such arrangements are not legally protected and contravene Chinese labor laws.
Implications for Employers and Employees
This ruling reinforces China's stringent stance on cryptocurrencies while highlighting the potential risks for employees accepting wages in digital assets. Employers are advised to ensure compliance with labor and financial laws to avoid legal disputes.
Broader Context: Digital Yuan and Legal Precedents
This case coincides with another major event: Yao Qian, a key figure in China's digital yuan initiative and former head of the Science and Technology Supervision Department at the China Securities Regulatory Commission, faces bribery charges. Allegations include using digital currencies for financial misconduct, underscoring China's dual approach to regulating digital assets while advancing its state-backed digital currency.
As cryptocurrency adoption grows globally, this case serves as a reminder of the complexities and legal challenges involved in integrating digital currencies into traditional financial frameworks.
