Why does China ban virtual currency trading platforms?

In the context of cracking down on illegal transactions such as fraud and money laundering, China has taken strict restrictive measures on virtual currency trading platforms. Behind this decision, there are multiple considerations and complex contradictions.

Contradiction focus 1: How do judicial authorities deal with confiscated virtual currencies? If they are cashed in China, the legality of the transaction will be highlighted, and the buyer and the transaction may be involved in illegal activities.

Contradiction focus 2: The road to overseas cashing out is not a smooth one. The entry and exit of virtual currencies involves customs declaration. Once the customs releases it, it may be regarded as an indirect recognition of its legality. In addition, overseas transactions are subject to foreign exchange restrictions, and the operation is complicated and easy to violate the law.

Contradiction focus 3: The value of virtual currencies fluctuates violently and has a short life cycle. If judicial authorities hold them for a long time, they will face value fluctuations, inventory management problems, and may even breed corruption, and financial management will also become a challenge.

Core crux: The legal status of virtual currencies is vague, which leads to a dilemma in their handling and supervision. The Chinese government's position is to prevent financial risks, maintain financial stability, and protect the public from potential losses caused by fluctuations in the virtual currency market.

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