Recently, an article published by the Shanghai High Court titled '(What is the end of high financing for issuing virtual currency?)' has attracted much attention. The article clearly points out that individual holding of virtual currency is not illegal, which has caused a stir in the domestic cryptocurrency community, with many self-media outlets promoting it as if it means our country is relaxing restrictions on virtual assets. However, lawyer Mankun reminds everyone to stay rational, thus pouring 'two bowls of cold water.'
First bowl of cold water: Holding is already in a gray area of legality
Reviewing our country's policy documents related to virtual currency, since the release of the '924 Notice' in 2021, it has been clearly stated that activities related to virtual currency, such as providing trading services, exchange services, and issuing virtual currency, are illegal financial activities, and they do not have the legal status and legal compensation of legal currency. However, the entire document does not mention that 'individual holding of virtual currency' is illegal. In fact, individual holding of virtual currency has long been in a gray area of legality. The article from the Shanghai High Court merely reiterates this point and does not indicate a relaxation of policy. Moreover, in some cases, virtual currency has been regarded as virtual property. Similar determinations have been made in relevant cases by the Hangzhou Internet Court and the Nanshan District Court of Shenzhen. From this perspective, virtual assets are similar to QQ coins or rare game items; holding them is not illegal, but their legality has not been fully recognized.
Second bowl of cold water: The premise of holding 'acquisition' carries many risks
1. **Self-purchase**: Purchasing is a common way to acquire virtual assets. Although the '924 Notice' does not explicitly state that 'purchase behavior' is illegal, virtual currency trading activities are not protected by law. Once there is a financial loss, it is extremely difficult to seek rights protection. Moreover, the 'legality' of the purchasing behavior depends on the compliance of the transaction method and the source of funds. Purchasing coins from overseas exchanges may involve foreign exchange and tax issues, and over-the-counter trading poses risks such as information asymmetry that can lead to fraud. If the virtual currency purchased involves illegal fund transfers, even if the purchase itself is not illegal, it may still face account freezing.
2. **Participate in mining**: Mining was once one of the main ways to acquire virtual currency, but policies have changed. In 2021, relevant notifications classified mining as an eliminated industry, and large-scale mining is restricted. Although personal small-scale mining has not been directly banned in our country, some mining activities may easily touch the legal bottom line in practice, such as illegal electricity use, illegal utilization of others' computing resources, and financial compliance risks. For example, mining with stolen electricity constitutes infringement or even suspected theft, maliciously controlling others' computers for mining constitutes a criminal offense, and virtual currency obtained from mining that involves illegal transactions may also be held accountable.
3. **Participate in investment**: Acquiring virtual currency through investment projects varies in situation. ICOs are clearly illegal financial activities, having been prohibited by the '94 Document' back in 2017 for raising funds through ICOs. However, in recent years, VC participation in investment to obtain project tokens may seem to avoid ICO risks, but there are also hidden dangers. The projects themselves may involve compliance issues, and if there are problems with the transparency and legality of token distribution, disputes may easily arise.
4. **Participate in activities**: Participating in activities organized by project parties, such as airdrops and referral rewards, to acquire virtual currency may seem simple, but the risks are not small. Airdrops themselves are not illegal, but some projects may use them as a cover for illegal activities; referral rewards that reach three levels or more may be deemed pyramid schemes, and some activities that promise high returns to induce recharge investments belong to Ponzi schemes, putting participants at risk of legal disputes.
Lawyer Mankun suggests
1. **Compliance first, choose reasonable channels**: When investors engage in various operations to acquire virtual currency, they must ensure that the transaction methods and sources of funds are legal, choose the right platforms and projects, and keep transaction records to reduce risks.
2. **Stay away from illegal activities and avoid high-risk projects**: Avoid participating in illegal fundraising such as ICOs, high-yield referral rewards, pyramid schemes, and Ponzi schemes to ensure investments are legal and compliant.
3. **Seek professional legal support**: For the complex legal issues involved with virtual currency, timely consultation with a professional lawyer is necessary to protect one's rights.
In summary, the development of virtual currency presents both opportunities and risks. Investors need to be sensitive to laws and regulations, invest cautiously and rationally, and find a balance between innovation and compliance.
