Let's discuss a question:
What problems exist if an individual trades coins in China, then goes to Hong Kong to convert them into an HK card, and then uses the HK card to transfer back to China?
Assuming we use an HK card, if we convert a limit of 50,000 USD, what problems might arise?
I believe this issue is a bug. We cannot say that there are absolutely no problems here, but we can only say that currently we haven't seen any cases of this model. If we really have to pin a legal issue on this, I personally believe it would at most be classified as illegal currency exchange, which is an administrative violation, rather than a criminal offense.
Let me elaborate, many people say that now I have traded U with RMB here.
For example, if I have a principal of 100,000, and I’ve speculated it into 1,000,000, then I take the 1,000,000 U to Hong Kong's H station, or some Hong Kong brokers, or even some street OTC conversion shops, I convert it into HKD, and I successfully opened an HKD card at a bank in Hong Kong, then I can also deposit whatever cash or transfers from these OTCs into my foreign currency card, then I have this foreign currency source.
So if I have this foreign currency source, and I use the annual limit of 50,000 USD to convert it into RMB, is there a problem with this action?
It wasn't until we encountered this situation that we were really quite troubled. We discussed this issue a lot, and many people think this is a bug, feeling that it seems there is no problem with cashing out?
So how should we view this matter? We can't say there are no issues, because one day, the authorities in the country might say we are disseminating methods of crime... However, if you insist on finding legal issues, they can indeed be found.
How to find this? Firstly, can they (Certain Uncle Guan) understand this as you completing the so-called currency exchange through the medium of virtual currency? Because if they want to pin this on you, they can indeed do so.
The legal consequence of this is a penalty of 30% on the amount exchanged.
Then someone says, how do you define U? Moreover, if I say I have a principal of 100,000 and finally made 1,000,000, how is the amount for currency exchange calculated? Is it based on 100,000 or 1,000,000? Because it's hard to define whether this U is from China or overseas. Where is its IP, etc.? Is what I traded in the RMB part or the USD part? How should it be calculated? Therefore, many points of controversy arise here...
Of course, the principal of 100,000 can definitely be counted, but whether the premium earned U part that has turned into foreign currency counts as illegal currency exchange is still very hard to judge...
Then someone asks, why does Hong Kong accept U for currency exchange? There are people doing this business openly on the street, so why would there be a problem if I use this U to exchange?
This is actually the same as currency exchange funds in Hong Kong, money changers... You take RMB and someone exchanges it for you in Hong Kong, but you can't say that just because they are open for business, I can go find them to exchange without any issues; that reasoning doesn't hold (Some Uncle Guan does not accept this).
So from the perspective of legal application, the act of earning U in Hong Kong and opening a foreign currency card for storage can be calculated as illegal currency exchange. However, they can only categorize it as an administrative violation, but the dispute lies in whether the premium part of the U can be counted as part of the currency exchange.
So this issue needs to be analyzed specifically; the main problem is the outflow of virtual currency. We cannot completely clarify the source of the money; we also cannot fully understand the purpose for which they buy coins. We can only speculate that the person's money is for business or selling houses, so there shouldn’t be any issues.
This can only be said as us fulfilling our duty of care in the process of selling currency, which matches our subjective understanding and prevention obligations. Thus, we received the money objectively, and we can subjectively prove that we fulfilled our duty of care, so I belong to the category of good faith acquisition, and that's all there is to it.
More issues can only be judged by Certain Authorities.
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