Article source: Xiao Sa lawyer
Recently, some partners have contacted the Sa Jie team to inquire about the legal risks of exchanging cryptocurrency (especially USDT) and the basic channels and practical operation methods. Today, the Sa Jie team will briefly explain the legal risks and feasibility of some of the current 'U withdrawal' channels, helping everyone to use and handle cryptocurrency assets legally and compliantly.
Special note: This article is only for ordinary users whose sources of funds are clean, and who buy and hold coins solely for personal daily consumption and normal investment behavior. At the same time, all methods detailed in this article are known to the Sa Jie team during the provision of legal services to clients. The Sa Jie team has no financial ties with the channels themselves, and the related opinions are solely theirs, for reference only.
01. Licensed cryptocurrency exchanges in Hong Kong + broker channels to exchange U
Currently, the list of licensed cryptocurrency exchanges (or operating entities) announced by the Hong Kong Securities and Futures Commission has reached as high as 7, and just a few days ago, 4 licenses were released at once, which shows the prosperity of cryptocurrency development in Hong Kong.
Based on the practical experience of the Sa Jie team, currently, using the Hong Kong channel to withdraw U is indeed a legal and compliant way with low legal risks. However, it should be noted that currently, USDT and other cryptocurrency assets cannot be traded directly on licensed exchanges and need to be operated through BTC/ETH spot channels. Specific operations will take HKVAX as an example.
HKVAX is backed by the old brokerage firm 'Victory Securities' (stock code: 8540.HK), a fully licensed broker in Hong Kong. Before entering the cryptocurrency space, 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 exchange U for BTC, ETH, or other fiat currencies, with a very short transaction cycle that is basically unaffected by market financial risks. After the exchange is completed, the funds (in HKD or USD) will be credited to a bank account in Hong Kong.
The advantage of this method lies in its compliance for obtaining U, with clear funding channels and a low likelihood of receiving illicit funds, essentially eliminating the risk of frozen cards. However, there are also drawbacks. Firstly, current residents of mainland China cannot directly open cryptocurrency trading accounts. Using this channel may require assistance from reliable friends abroad. Secondly, this type of exchange may require physical presence in Hong Kong (to open a personal bank account, etc.), which can be cumbersome for small amounts of U.
02. Major exchanges like some An and some K can all sell through OTC.
This method has the lowest cost, and you can operate it by opening an account yourself. However, it should be noted that this channel has now become one of the easiest channels to receive illicit funds. If illicit funds are received, not only may the bank card be frozen, rendering funds unusable, but there is also a possibility of subsequent confiscation by judicial authorities in our country.
If you choose this method to withdraw U, the Sa Jie team suggests reviewing the trading records, evaluations, and other information of the trading platform, and selecting a counterpart with a high reputation for transactions, staying away from counterparts with poor trading reputations and significantly abnormal trading records.
03. U card exchanging money
Regarding the compliance of U cards, the Sa Jie team has specifically published articles explaining this.
Sa Jie team | Can ordinary people use U cards? Will the card issuers encounter problems?
Overall, the issue is not significant. Some U cards can even be linked to apps like WeChat, a certain yellow kangaroo, or a certain blue wallet.
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 card issuers, so it’s best to choose a reliable one that can pass KYC. Some U card service providers indeed have suddenly stopped their services. This year, the Sa Jie team has received inquiries from several partners, stating that their previously established U card service providers had suddenly stopped providing services to users in mainland China a few months ago, causing them to have money trapped in the card, leading to many troubles.
04. Coin merchants exchanging money for U
Regarding the risks of exchanging money with coin merchants, most of the risks are similar to those of withdrawing funds through exchange OTCs. There is also a possibility of receiving money from unknown sources, leading to frozen cards or being summoned as witnesses. The Sa Jie team has even handled extreme cases where partners were investigated as suspects (accomplices) due to repeatedly exchanging money with coin merchants.
Overall, the risks of coin merchants are relatively high. Do not easily trust so-called 'frozen card guarantees' or 'frozen card compensations'. Unless you have very reliable partners that you know well, do not choose this path to exchange for U.
05. Offline exchange of U in Hong Kong
This path generally requires an overseas (Hong Kong is also acceptable) bank card. In the process of handling cases, the Sa Jie team has visited various offline shops in Hong Kong with clients to observe the U exchange process.
There are two types of physical stores in Hong Kong: one is ATM machines, and the other is small offline shops. Generally, these small shops do not register customer information for daily transaction amounts below 120,000 HKD; they are pay-and-go. For transactions exceeding 120,000 HKD, simple KYC is required, and the handling fee generally fluctuates around 4%.
Overall, the Sa Jie team believes that for ordinary users whose sources of funds are clean and who buy and hold coins solely for personal daily consumption and normal investment behavior, this is indeed a low-cost and convenient channel. However, there is also a risk of receiving illicit funds. It is recommended to exchange at more stable and long-term operating stores in places like Mong Kok or Tsim Sha Tsui to prevent unexpected incidents.
06. In conclusion
It is important to note 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 illicit funds and high transaction costs. It is recommended that partners consider carefully before taking action and not to make rash decisions.
