Recently, I wanted to inquire about the legal risks of exchanging cryptocurrency (especially USDT) and the basic channels and operational methods. Today, I will briefly explain the legal risks and feasibility of some 'cashing out' channels, helping everyone legally and compliantly use and dispose of crypto assets. It should be specifically noted that this article is aimed at ordinary users with clean fund sources, who buy and hold cryptocurrencies solely for personal daily consumption and normal investment activities. Additionally, all methods detailed in this article are known to the Sa Jie team during their provision of legal services to clients, and the Sa Jie team has no vested interest in the channels themselves. The opinions expressed are solely those of one party and are for reference only.
01 Hong Kong licensed crypto exchange + brokerage channel to cash out USDT
Currently, the list of licensed crypto asset exchanges (or operating entities) officially announced by the Hong Kong Securities and Futures Commission has reached 7, and just a few days ago, 4 licenses were issued at once, reflecting the prosperity of crypto assets in Hong Kong.
Based on my practical experience, currently, when it comes to cashing out USDT, utilizing the Hong Kong channel is indeed a legitimate and compliant way with low legal risks. However, it should be noted that at present, crypto assets like USDT cannot be directly traded on licensed exchanges and need to be converted through BTC/ETH spot channels for auxiliary operations. Specifically, taking HKVAX as an example, it is backed by the well-established broker 'Victory Securities' (stock code: 8540.HK), which is a fully licensed broker in Hong Kong. Before entering the crypto asset market, it already held licenses 1, 2, 4, 6, and 9, and in 2023, it obtained a license from the Hong Kong Securities and Futures Commission for crypto asset trading, consultation, and asset management services. Therefore, it can legally use the Hong Kong BTC/ETH spot channel to help users convert USDT into BTC, ETH, or other fiat currencies, with a very short trading cycle that is generally unaffected by market financial risks. After the conversion, the funds (Hong Kong Dollars or US Dollars) will be transferred to a bank account in Hong Kong. The advantage of this method lies in its good compliance with cashing out USDT, clear fund flows, and a low possibility of receiving illicit funds, with virtually no risk of card freezing. However, there are also disadvantages: first, current mainland residents cannot directly open crypto asset trading accounts, and using this channel may require reliable overseas friends for assistance; second, this conversion method may require physical presence in Hong Kong (such as opening one's own bank account), which can be cumbersome and inconvenient for small USDT cashouts.
02 Major exchanges like Some An and Some K can sell through OTC methods
This method has the lowest cost and can be operated by opening an account independently. However, it should be noted that this channel has currently become one of the easiest ways to receive dirty money. Upon receiving dirty money, not only can the bank card be frozen, making funds unusable, but it may also potentially be subject to seizure by judicial authorities in China. If you choose this method to cash out USDT, the Sa Jie team recommends checking the trading party's platform trading records, evaluations, and other information to select a reputable counterparty for transactions, avoiding those with poor trading reputations and significant transaction record anomalies.
03 Cash out using USDT cards
Regarding the compliance of USDT cards, the Sa Jie team has specifically published an article explaining: Sa Jie Team | Can ordinary people use USDT cards? Will USDT card issuers run into problems? Overall, the issues are not significant; some USDT cards can even be linked to WeChat, a certain yellow kangaroo app, or a certain blue wallet app for use. However, USDT cards also carry risks. Currently, the most common are Mastercard or UnionPay USDT cards, which have relatively safe fund sources, but there are too many card agents, so you should choose a reliable one that can pass KYC. Some USDT card service providers indeed have suddenly stopped their services; earlier this year, the Sa Jie team received inquiries from several partners stating that their previously opened USDT card service providers abruptly ceased to provide services for users in mainland China a few months ago, causing them to have funds stuck in the card, leading to many troubles.
04 Exchange money for USDT
Regarding the risks of exchanging money through brokers, most risks are similar to those of OTC cashing out from exchanges. There is also a possibility of receiving untraceable dirty money, leading to card freezing or being called as a witness for testimony. Furthermore, the Sa Jie team has even handled extreme cases where individuals were investigated as suspects (accomplices) due to multiple exchanges with brokers. Overall, the risks associated with brokers are relatively high; do not easily trust so-called 'card freezing guarantees' or 'compensations for card freezing'. Unless you have very reliable and well-acquainted partners, do not choose this path to cash out USDT. 05 Offline cash out for USDT in Hong Kong
This path generally requires a bank card from abroad (Hong Kong is also acceptable). The Sa Jie team has physically accompanied clients to Hong Kong to observe the process of exchanging USDT at various offline shops. There are two types of physical stores in Hong Kong: one is ATMs, and the other is offline shops. Generally, these shops do not register customer information for daily transaction amounts below 120,000 Hong Kong dollars and allow transactions to be completed without delay. For transactions exceeding 120,000 Hong Kong dollars, simple KYC is required, and the handling fee usually fluctuates around 4%. Overall, the Sa Jie team believes that for ordinary users with clean fund sources who buy and hold cryptocurrencies solely for personal daily consumption and normal investment activities, this is indeed a cost-effective and convenient channel. However, there are also risks of receiving dirty money. It is advisable to exchange at more stable, long-established shops in areas like Mong Kok or Tsim Sha Tsui to prevent unexpected incidents.
06 Written at the end
It should be noted that currently, there is no so-called 'completely safe' or 'perfect' USDT cash-out plan. Even the centralized solutions provided in this article still carry risks such as receiving dirty money or high transaction costs. It is advised that partners carefully consider before taking action and not make rash decisions.
