China's top court is moving to overhaul trial standards for disputes related to cryptocurrencies and artificial intelligence (AI).

On May 27 local time, blockchain outlet Cointelegraph reported that the Supreme People's Court said it would push research into trial rules for cases involving virtual currencies, cross-border finance and AI as it refines its system for handling digital-economy disputes.

The measure is seen less as a move by China to ease its cryptocurrency policy than as an effort to update judicial standards to deal with digital-asset disputes that continue to arise under a ban, an analysis said. China currently bans cryptocurrency trading and mining, but investment losses, fraud and asset disputes related to cryptocurrencies continue. The court is therefore interpreted as seeking to establish a clear framework for applying standards on the scope of liability and damages.

Liu Guixiang (류구이샹), a member of the Supreme People's Court's judicial committee, said at a news conference that it would conduct in-depth research into trial rules for new types of cases including virtual currencies and cross-border finance. He also said it would put in place, as quickly as possible, judicial interpretations related to civil compensation issues stemming from insider trading and market manipulation.

The review also includes disputes over AI and data rights. The Supreme People's Court is also studying judicial protection rules for conflicts of rights that arise from AI-generated content, data ownership and data transactions. This has increased the likelihood that Chinese courts will present more specific standards in future intellectual property disputes or data rights lawsuits involving cryptocurrencies and AI, an assessment said.

The move is also linked to recent major cryptocurrency crime cases connected to China. Chen Zhi, the founder of Cambodia's Prince Group, was arrested in Cambodia early this year and extradited to China, and is suspected of running a so-called pig butchering scam ring. The U.S. Justice Department previously announced it had seized about $15 billion worth of bitcoin from a group linked to Chen Zhi. As cross-border crimes and money-flow cases involving cryptocurrencies grow, the need to refine judicial standards has also increased.

China also reaffirmed there was no change in its basic cryptocurrency policy stance. The People's Bank of China banned financial institutions from providing bitcoin-related services in 2013, and in 2021 it blocked cryptocurrency trading, mining and even initial coin offering (ICO) activities. In February this year, it continued tightening by banning unlicensed offshore yuan-pegged stablecoins and the issuance of unapproved real-world asset (RWA) tokens.

China, by contrast, is accelerating the expansion of state-led digital currency. Chinese authorities recently allowed commercial banks to share some benefits with customers holding the digital yuan, and are fostering the digital yuan, a central bank digital currency (CBDC), as a new digital legal tender system. The trend is continuing of a dual strategy that blocks private stablecoins or offshore digital assets while actively expanding a state-controlled digital currency.

Ultimately, the measure is less a signal that China intends to bring cryptocurrencies into the institutional system than an effort to refine the standards courts will use to handle rising digital asset and AI disputes under a ban. What detailed interpretations and liability standards China's judiciary sets out in the future is expected to have a significant impact on the global cryptocurrency and AI industries.