Author: Xiao Sa lawyer
Recently, some partners have contacted the Sister Sa team, wanting to consult about the legal risks, basic channels, and practical methods of exchanging cryptocurrencies (especially USDT). Today, the Sister Sa team will briefly explain to you the legal risks and feasibility of some current "oil production" channels, to help you use and dispose of encrypted assets legally and in compliance with regulations.
In particular, this article is only for ordinary users who have clean sources of funds and buy and hold coins only for personal daily consumption and normal investment behavior. At the same time, all the methods detailed in this article are known to the Sajie team in the process of providing legal services to customers. The Sajie team has no interest relationship with the channel itself, and the relevant opinions are only one person's opinion and are for reference only.
01. Licensed cryptocurrency exchange + broker channel to exchange U
Currently, the list of licensed cryptocurrency exchanges (or operating entities) announced by the Hong Kong Securities and Futures Commission has reached 7, and just a few days ago, 4 licenses were issued at once, indicating the prosperous development of cryptocurrency assets in Hong Kong.
Based on the practical experience of the team, currently, using Hong Kong channels for U withdrawals is indeed a legal and compliant way with low legal risks. However, it is important to note that currently, cryptocurrencies like USDT cannot be directly traded on licensed exchanges and need to be operated through BTC/ETH spot channels. For specific operations, take HKVAX as an example.
Behind HKVAX is the established broker 'Victory Securities' (stock code: 8540.HK), which is a fully licensed broker in Hong Kong. Before entering the cryptocurrency asset sector, it already held licenses No. 1, 2, 4, 6, and 9. In 2023, it obtained licenses from the Hong Kong Securities and Futures Commission for cryptocurrency trading, consulting, and asset management services. Therefore, it can legally use Hong Kong's BTC/ETH spot channels to help users exchange U for BTC, ETH, or other fiat currencies, with a very short transaction cycle and minimal impact from market financial risks. After the exchange is completed, the funds (Hong Kong dollars or US dollars) will be transferred to a Hong Kong bank account.
The advantage of this method is that the compliance of U withdrawal is relatively good, the funding chain is clear, and the possibility of receiving illicit funds is low, with almost no risk of card freezing. However, there are also drawbacks. Firstly, current residents of the mainland cannot directly open cryptocurrency asset trading accounts, so this channel may require reliable overseas friends or relatives for assistance. Secondly, this exchange method may require physically going to Hong Kong (to open your own bank account, etc.), which is cumbersome and inconvenient for small U withdrawals.
02. Major exchanges like a certain An and a certain K can also sell through OTC methods.
This method has the lowest cost, and you can operate by opening an account on your own. However, it is important to note that this channel has currently become one of the easiest ways to receive dirty money. After receiving dirty money, not only might the bank card be frozen, rendering the funds unusable, but there is also a chance that it could be confiscated by our judicial authorities later.
If you choose this method to withdraw U, the team recommends checking the trading platform’s transaction records, evaluations, and other information of the trading party, selecting a counterpart with a high reputation for transactions, and avoiding those with poor transaction credibility or significantly abnormal transaction records.
03. Exchanging money for U cards
Regarding the compliance of U cards, the team has specifically published articles explaining this:
Team | Can ordinary people use U cards? Will U card issuers face issues?
Overall, the issues are not significant; some U cards can even be linked to WeChat, a certain yellow kangaroo, or a certain blue wallet app for use.
However, U cards also carry risks. Currently, the most common are MasterCard or UnionPay U cards, with relatively safe funding sources. However, there are too many card issuing agents, so you should choose a reliable one that can pass KYC checks. Some U card service providers do indeed stop services suddenly; the team has received inquiries this year from several partners claiming that their previously established U card service provider suddenly ceased to provide services to users in mainland China a few months ago, causing them to have funds stuck in the card and resulting in many troubles.
04. Currency traders exchanging money for U
Regarding the risks of exchanging money with currency traders, most risks are similar to those of OTC withdrawals from exchanges, and there is a possibility of receiving suspicious dirty money, which could lead to card freezing or being collected as a witness statement. In fact, the team has even handled extreme cases where individuals were investigated as suspects (accomplices) due to multiple exchanges with currency traders.
In general, the risks associated with currency traders are relatively high. Do not easily trust claims of 'card freezing guarantees' or 'compensation for frozen cards.' Unless you have a very reliable and trusted partner, do not choose this method to exchange U.
05. Offline exchange of U in Hong Kong
This method generally requires a bank card from overseas (Hong Kong is also acceptable). During the handling of cases, the team has accompanied clients to physically visit Hong Kong to observe the U exchange process at various offline small shops.
There are two types of physical stores in Hong Kong: one is ATM machines, and the other is offline small shops. Generally, these small shops do not register customer information for daily transaction amounts below 120,000 Hong Kong dollars, allowing for quick exchanges; for transactions exceeding 120,000 Hong Kong dollars, simple KYC is required, and the handling fee generally fluctuates around 4%.
Overall, the team believes that for ordinary users whose source of funds is clean and who hold cryptocurrencies solely for personal daily consumption and normal investment activities, this is indeed a low-cost and convenient channel. However, there is still a risk of receiving dirty money, and it is advisable to exchange at more stable and long-established stores in places like Mong Kok or Tsim Sha Tsui to prevent unexpected incidents.
06. Written at the end
It should be noted that there is currently no so-called 'completely safe' or 'perfect' U withdrawal scheme. Even the centralized solutions provided in this article still carry risks such as receiving dirty money and high transaction costs. It is recommended that partners consider carefully before taking action and avoid making rash decisions.