Article source: Lawyer Xiao Sa
Recently, some partners have contacted the Sa Jie team to inquire about the legal risks of exchanging cryptocurrencies (especially USDT) and the basic channels and practical operating methods. Today, the Sa Jie team will briefly explain some of the legal risks and feasibility of current 'oil withdrawal' channels to help everyone legally and compliantly use and dispose of cryptocurrency assets.
Special note: This article is only for ordinary users whose funds are from clean sources, and who buy and hold cryptocurrencies solely for personal daily consumption and normal investment activities. Meanwhile, all methods detailed in this article are known to the Sa Jie team during the provision of legal services to clients. There is no interest relationship between the Sa Jie team and the channels themselves, and the opinions expressed are solely those of the author for reference only.
01. Licensed cryptocurrency exchanges in Hong Kong + brokerage channels to exchange U
Currently, the list of licensed cryptocurrency exchanges (or operating entities) officially announced by the Hong Kong Securities and Futures Commission has reached as many as seven, and just a few days ago, four licenses were released at once, highlighting the prosperity of cryptocurrency development in Hong Kong.
Based on the practical experience of the Sa Jie team, currently, withdrawing U through Hong Kong channels is indeed a legal and compliant way with low legal risks. However, it should be noted that currently, cryptocurrencies like USDT cannot be directly traded on licensed exchanges and need to be traded through BTC/ETH spot channels as auxiliary operations. For specific operations, let’s take HKVAX as an example.
HKVAX is backed by the established brokerage 'Victory Securities' (stock code: 8540.HK), a fully licensed brokerage in Hong Kong. Before entering the cryptocurrency sector, it already held licenses 1, 2, 4, 6, and 9. In 2023, it obtained licenses for cryptocurrency trading, consulting, and asset management services from the Hong Kong Securities and Futures Commission. Therefore, it can legally use the Hong Kong BTC/ETH spot channels to help users convert U into BTC, ETH, or other fiat currencies. The trading cycle is very short and is basically unaffected by market financial risks. After the exchange is completed, the funds (in HKD or USD) will be sent to the Hong Kong bank account.
The advantage of this method is that the compliance of withdrawing U is relatively good, the funding chain is clear, and the possibility of receiving dirty money is low, with essentially no risk of card freezing. However, there are also drawbacks. First, current residents of mainland China cannot directly open cryptocurrency trading accounts, so using this channel may require reliable friends overseas to assist; second, this exchange method may require physically going to Hong Kong (opening a personal bank account, etc.), which is cumbersome and inconvenient for small amounts of U.
02. Major exchanges like Anyan and K can sell through OTC channels
This route has the lowest cost and can be operated by oneself, but it should be noted that this channel has now become one of the easiest to receive dirty money. If dirty money is received, not only may the bank card be frozen, rendering funds unusable, but there is also a possibility of subsequent confiscation by our judicial authorities.
If you choose this route to withdraw U, the Sa Jie team recommends reviewing the trading records, evaluations, and other information of the trading party's platform, so as to select a reputable counterparty for transactions, and to stay away from those with poor transaction reputations and significant anomalies in their transaction records.
03. U card to exchange money
Regarding the compliance of U cards, the Sa Jie team has specifically published an article explaining this.
Sa Jie team | Can ordinary people use U cards? Will the card issuers encounter problems?
Overall, there are not many problems, and some U cards can even be linked to apps like WeChat, a certain yellow kangaroo, and a certain blue wallet for use.
However, U cards also carry risks. Currently, the most common ones in the market are Mastercard or UnionPay U cards, which have relatively safe sources of funds. However, there are too many agents for card issuance, so one should choose a reliable one that can pass KYC. Some U card service providers do indeed have situations where they suddenly stop services. The Sa Jie team received consultations from several partners this year, claiming that the U card service providers they previously opened suddenly ceased providing services to users in mainland China a few months ago, leaving them with money stuck in the card, causing a lot of trouble.
04. Exchanging money with cryptocurrency merchants to withdraw U
Regarding the risks of exchanging money with cryptocurrency merchants, most of the risks are similar to those of OTC withdrawals from exchanges. There is also a possibility of receiving unknown dirty money, leading to card freezes or being collected as a witness. The Sa Jie team has also dealt with extreme cases where individuals were investigated as suspects (accomplices) due to repeatedly exchanging money through merchants.
Overall, the risks with cryptocurrency merchants are relatively high. Do not blindly trust so-called 'card freeze guarantees' or 'card freeze compensations'. Without very reliable partners you know well, do not choose this path to withdraw U.
05. Offline U exchange in Hong Kong
This route generally requires a bank card from abroad (Hong Kong is acceptable). During case handling, the Sa Jie team has accompanied clients to Hong Kong to observe various offline small stores' U exchange processes.
There are two types of physical stores in Hong Kong: one is ATMs, and the other is offline small shops. Generally, these small shops do not register customer information for daily transaction amounts below HKD 120,000; transactions can be made freely. For transactions exceeding HKD 120,000, a simple KYC is required, and the handling fee usually fluctuates around 4%.
Overall, the Sa Jie team believes that for ordinary users whose funds are from clean sources and who buy and 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-standing stores such as Mong Kok or Tsim Sha Tsui to prevent unexpected incidents.
06. Final remarks
It should be noted that there is currently no so-called 'completely safe' or 'perfect' U withdrawal plan. Even the centralized solutions provided in this article still carry risks such as receiving dirty money and high transaction costs. It is advisable for partners to consider carefully before taking action and not to make rash decisions.
