In recent years, cryptocurrencies have rapidly risen around the world, attracting the attention of countless investors. However, for investors in mainland China, cryptocurrency trading not only faces severe policy challenges, but also requires a deep understanding of the legal risks and potential consequences.
1. Bitcoin is not legal tender, and there are legal risks in trading
In China, virtual currencies such as Bitcoin do not have the status of legal tender. This means that using RMB (R) to exchange virtual currencies (U) is actually an illegal act. Although there is no strict crackdown on individual transactions, this behavior still exists in a legal gray area. Investors should be cautious and avoid using virtual currencies for exchange rate speculation or soliciting people, which may lead to greater legal problems.
2. A complete ban on cryptocurrency-related businesses
It’s not just individual investors who need to be aware that any business activity involving cryptocurrencies is strictly prohibited in China. This includes, but is not limited to:
- Opening an exchange: Any platform that provides virtual currency trading for Chinese residents, whether domestic or overseas, is considered illegal.
- Issuing tokens (coin issuance): Issuing tokens through ICO (initial coin offering) or other forms of financing is illegal.
- Conducting over-the-counter (OTC) transactions: Providing over-the-counter (OTC) trading services for virtual currencies is also severely cracked down on.
These activities not only violate the (Notice on Further Preventing and Dealing with the Risks of Virtual Currency Trading Speculation issued by the People's Bank of China and Ten Other Departments), but may also involve a number of illegal activities such as illegal fundraising and illegal operations. Investors and related practitioners will face severe legal sanctions.
3. Services provided by overseas exchanges are also illegal
As the virtual currency market becomes globalized, many overseas exchanges provide services to Chinese residents through the Internet. However, Chinese regulators have made it clear that any overseas virtual currency exchange that provides services to Chinese residents is also an illegal financial activity. This means that no matter where investors are located, as long as they are residents of mainland China, they may face legal risks when participating in transactions on overseas exchanges.
4. Potential legal risks of personal investment
Although the buying and selling of virtual currencies by individuals has not yet been completely banned, there are still many legal risks in participating in such activities:
- Civil liability: Any virtual currency investment behavior that violates public order and good morals will be deemed invalid in the relevant civil law, and the investor will bear all losses arising therefrom.
- Criminal liability: If the investment behavior is suspected of disrupting financial order and endangering financial security, the relevant departments will investigate and deal with it in accordance with the law, and investors may face criminal penalties.
5. Differences in domestic and foreign understanding and law enforcement
It is important to note that there may be differences in the understanding and enforcement of cryptocurrencies in various regions of China. In some economically developed regions, supervision may be stricter, while in other regions, enforcement may be relatively weak. However, regardless of regional differences, there is always a risk of cryptocurrency-related violations being investigated and punished.
If you are being questioned by the police, do not confess your guilt. Insist that the virtual goods I bought/sold are called USDT. The police will let you go in due time. I don't understand what you mean by US dollars. The credit currency issued by the Federal Reserve is called US dollars. I bought virtual goods USDT. It can't be called US dollars just because it costs 6.9 yuan each. I bought a CSGO sticker for 6.9 yuan. Is it also called US dollars?
