Bitcoin is a digital currency that exists on the Internet and can be used for online transactions. Although Bitcoin is labeled as a "virtual currency", in fact it is just a digital token that can be traded through electronic channels. Bitcoin has no physical existence, is not a real currency, is not issued in my country, and is not a legal tender. So, is it legal to use "Bitcoin" to repay monetary debts?

Using Bitcoin to repay monetary debts is invalid

Yang borrowed 100,000 yuan from Zhang. After paying back part of the loan, he still had 70,000 yuan to pay back. After Zhang urged him to pay, Yang said he could pay back the remaining loan by paying "Bitcoin". However, after Zhang issued the receipt, he found that the APP involved in the transaction could not be opened, and the "Bitcoin" paid by Yang could not be converted into cash. After negotiations failed, Zhang sued Yang in court, demanding the repayment of the 70,000 yuan loan.

The court held that, according to the "Notice on Further Preventing and Dealing with the Risks of Virtual Currency Trading Speculation" jointly issued by the People's Bank of China and 10 other departments in September 2021, "Bitcoin" in this case is a virtual currency that does not have monetary attributes such as legal compensation and compulsion, is not a real currency, does not have the same legal status as currency, and should not and cannot be circulated and used as currency in the market. Yang used "Bitcoin" to repay monetary debts, which violated the relevant provisions of my country's departmental regulations and violated public order and good customs. The relevant civil legal acts should be deemed invalid. According to the law, Yang was ordered to return Zhang's loan of 70,000 yuan, and the second instance upheld the original judgment.

According to the Notice on Further Preventing and Dealing with the Risks of Virtual Currency Trading Speculation, virtual currencies do not have the same legal status as legal tender. Bitcoin, Ethereum, Tether and other virtual currencies have the main characteristics of being issued by non-monetary authorities, using encryption technology and distributed accounts or similar technologies, and existing in digital form. They are not legal tender and should not and cannot be circulated and used as currency in the market. The use of virtual currency to repay a loan violates relevant laws and regulations, and the relevant civil legal acts should also be deemed invalid.