The question of whether cryptocurrency-related inventions can be patented has become a focal point in intellectual property law, especially as blockchain and digital finance technologies continue to evolve. While some applications face rejection due to public policy concerns, others are being recognized for their technical innovation—provided they don't directly facilitate unauthorized financial activities. This article explores the legal framework, clarifies key terminology, and analyzes real-world cases to determine when such inventions may qualify for patent protection.
Understanding the Legal Framework: Patent Law and Public Interest
Under Article 5 of the Chinese Patent Law, inventions that "violate laws, social morality, or harm public interests" are not eligible for patent rights. This provision serves as a gatekeeper, ensuring that technological advancements do not undermine national stability or economic order.
The Patent Examination Guidelines (2010) further define harm to public interest as any invention whose implementation could endanger public safety or disrupt normal social and economic秩序 (order). In the context of digital currencies, this means that if an invention promotes illegal financial practices—such as unregulated fundraising or money laundering—it may be deemed ineligible.
However, it's crucial to distinguish between the use of a technology and the technology itself. An invention involving blockchain or digital transactions isn't automatically excluded just because it could be misused. The key lies in whether the invention inherently violates the law or only does so when abused.
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Key Definitions: Clarifying Digital Money Concepts
To properly assess patent eligibility, we must first understand the differences between related terms:
- Currency: A legally recognized medium of exchange issued by a central authority. In China, this refers exclusively to the Renminbi (RMB).
- Digital RMB (e-CNY): The digital form of legal tender issued by the People’s Bank of China (PBOC), backed by national credit and fully regulated.
- Cryptocurrency: A decentralized digital asset, often created and managed through cryptographic protocols. Examples include Bitcoin and Ethereum.
- Virtual Currency: A broad term for non-official digital tokens not issued by monetary authorities. These lack legal tender status and cannot be used as currency in the market.
While digital RMB is a legitimate form of法定货币 (legal tender), most other forms—like Bitcoin—are classified as virtual currency and are prohibited from circulation as money under Chinese regulations.
This distinction is critical: inventions tied to state-backed digital currency systems are generally acceptable, while those enabling unauthorized virtual currency issuance or trading may violate public interest clauses.
Case Study: A Blockchain Storage Innovation Under Review
Consider a patent application titled "Method and System for Alleviating Node Storage Pressure in Blockchain Networks." The invention aims to solve a growing problem in blockchain systems: ever-increasing data storage demands.
As blockchain networks like Bitcoin grow, full nodes must store vast amounts of transaction history. Over time, this creates significant storage burdens, threatening network scalability and accessibility.
How the Invention Works
The proposed method includes four key steps:
- Assess UTXO Ratio: Calculate the proportion of unspent transaction outputs (UTXOs) in blocks below a certain height.
- Compare Thresholds: Compare this ratio against a predefined threshold.
- Execute Auto-Transfer Transactions: If the UTXO ratio is low, initiate automated transactions that move remaining UTXOs into new blocks, preserving ownership and value.
- Prune Old Blocks: Once all relevant UTXOs are transferred, delete older blocks to free up storage space.
Crucially, this process maintains the verifiability of transaction origins while reducing node storage requirements—a major technical advancement in blockchain efficiency.
Initial Rejection: Concerns Over Public Interest
The patent office initially rejected the application, citing concerns that:
- It involves Bitcoin-like cryptocurrencies, which are restricted under PBOC guidelines.
- Enabling easier operation of such networks could promote illegal financial activities.
- Facilitating virtual currency transactions might threaten financial stability and enable illicit fundraising.
Thus, the examiner concluded the invention harmed public interest under Article 5 of the Patent Law.
Reversal on Appeal: Distinguishing Technology from Use
On appeal, the Patent Reexamination Board overturned the rejection. Their reasoning was clear:
"The invention itself does not harm public interest; harm arises only if the technology is misused for unauthorized cryptocurrency issuance or settlement."
In other words, the core innovation—a method for optimizing blockchain storage—is neutral. Like a database compression algorithm, it can serve many legitimate purposes beyond cryptocurrency, such as supply chain tracking or secure recordkeeping.
The board emphasized that rejecting such inventions based on potential misuse would contradict the legislative purpose of patent law: to encourage innovation.
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Policy Alignment: Supporting Blockchain, Not Unregulated Crypto
China’s stance on blockchain technology is supportive—even strategic—while remaining strictly opposed to private cryptocurrencies like Bitcoin.
The government promotes blockchain for enterprise applications, including:
- Cross-border payments
- Intellectual property registration
- Anti-counterfeiting systems
- Government data management
In contrast, decentralized cryptocurrencies are seen as threats to monetary sovereignty and financial control.
Therefore, patent applications involving:
- Consensus mechanisms
- Data integrity verification
- Distributed ledger optimization
…are increasingly likely to be granted—if they avoid direct ties to unauthorized digital token issuance or trading.
Frequently Asked Questions (FAQ)
Q1: Can I patent a Bitcoin-related invention in China?
No. Inventions that directly involve Bitcoin or similar decentralized cryptocurrencies as a core component are generally rejected for violating public interest rules. However, underlying blockchain techniques (e.g., consensus algorithms, encryption methods) may still be patentable if presented independently.
Q2: Is digital RMB technology patentable?
Yes. The People’s Bank of China and affiliated institutions have filed numerous patents related to digital RMB systems. Since these support state-regulated financial infrastructure, they align with legal and policy goals.
Q3: What makes a blockchain invention non-patentable?
An invention may be denied if it:
- Enables illegal fundraising via tokens
- Supports anonymous peer-to-peer crypto transactions
- Bypasses financial regulation
- Directly facilitates virtual currency circulation as money
Q4: Does using “Bitcoin” in the description guarantee rejection?
Not necessarily—but it increases risk. Describing an embodiment using Bitcoin can help illustrate technical functionality, but applicants should emphasize broader applicability and include alternative implementations (e.g., private chains, enterprise ledgers).
Q5: How can I increase my chances of approval?
Focus on:
- Technical problems solved (e.g., scalability, security)
- Neutral language (avoid promoting crypto usage)
- Broad claims not tied to specific virtual currencies
- Real-world applications beyond finance (e.g., logistics, healthcare)
Q6: Are there approved examples of blockchain patents?
Yes. Dozens of blockchain patents have been granted in China, particularly in areas like:
- Secure data transmission
- Smart contract execution
- Identity verification
- Fraud detection in distributed systems
These succeed because they emphasize technical utility, not financial speculation.
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Conclusion: Innovation Within Boundaries
Cryptocurrency-related patent applications walk a fine line. While inventions that enable unregulated digital money face rejection under public interest grounds, genuine technological advances in blockchain infrastructure are not only allowed—they're encouraged.
The key is framing: focus on solving technical challenges rather than enabling virtual currency transactions. By doing so, inventors can contribute to the growth of blockchain technology while staying within legal and regulatory boundaries.
As China continues to build its digital economy—centered on the digital RMB and state-approved blockchain platforms—the path forward for innovators is clear: advance the technology, respect the law, and design with responsibility.
Core Keywords: cryptocurrency patent, blockchain technology, digital RMB, patent law Article 5, public interest, node storage optimization, unspent transaction output (UTXO), virtual currency regulation