Bitcoin has recently reached new highs, but many may have doubts: is buying and selling Bitcoin legal in mainland China? The following will answer this question for you.
To conclude: personal purchase and holding of Bitcoin is not illegal.
From a legal perspective, simply purchasing Bitcoin is not illegal. However, if it involves the following behaviors, it falls within the scope of illegal activities:
Substituting the Renminbi, using Bitcoin as a medium for transaction payments.
Using Bitcoin or other virtual currencies for domestic and foreign money laundering.
Raising fiat funds through the issuance of Bitcoin or other virtual coins.
Conducting exchange services between Bitcoin or other virtual coins and the Renminbi.
Conducting exchange services between virtual coins.
Providing information intermediary and pricing services for virtual currency trading.
Acting as a dealer in buying and selling virtual currencies.
Once the above behaviors occur, the consequences can range from fines to criminal penalties, and even possible imprisonment.
Legal positioning of Bitcoin: similar to virtual goods.
In the legal context of mainland China, the positioning of Bitcoin and other virtual currencies is similar to Tencent's QQ coins. Users can legally purchase and hold Bitcoin, but cannot use it as a payment tool, nor engage in illegal financial activities.
For example:
Buying and holding Bitcoin: not illegal.
Selling Bitcoin at a premium: exists in a legal gray area, a delicate situation.
Participating in illegal activities related to Bitcoin, such as money laundering or fiat financing: clearly illegal, and severe cases may constitute a crime.
Analysis of illegal activities and consequences
Money laundering: using Bitcoin to transfer funds domestically and internationally may constitute illegal business operations.
Fiat financing: raising funds through the issuance of virtual currencies is suspected of illegal fundraising crimes.
Providing trading services: offering information intermediary or trading platforms for virtual currencies may also be recognized as illegal business operations.
If the above behavior violates the law, the consequences are severe and may lead to imprisonment.
International comparison: the current state of virtual currency regulation in the United States
Compared to China, the United States has a relatively complex and multi-faceted regulatory attitude towards Bitcoin and other virtual currencies.
U.S. Department of the Treasury: treats virtual currencies as money, requiring exchanges to apply for MSB (Money Services Business) licenses.
U.S. Securities and Exchange Commission (SEC): considers virtual currencies as securities, subject to securities law regulation.
U.S. Commodity Futures Trading Commission (CFTC): regards virtual currencies as commodities, included under commodity trading law regulation.
U.S. Internal Revenue Service (IRS): treats virtual currencies as property and taxes their transactions.
Various departments are conducting multi-faceted regulation of virtual currencies for their own interests, which limits industry development. However, with policy adjustments, more opportunities may arise in the future.
Opportunities and risks for ordinary investors
Currently, Bitcoin prices are high, exceeding the tolerance range of ordinary investors. For small retail investors, the opportunity for wealth in Bitcoin may have been missed. However, it is essential to note that any investment carries risks, and legality and compliance are the bottom line for investment.
In summary, buying and holding Bitcoin in mainland China is legal, but engaging in illegal activities will incur legal consequences. Investors should act cautiously and avoid breaking the law.
