Author: Lawyer Xu Qian
Introduction
Since the birth of Bitcoin, its price has surged multiple times, driving a global cryptocurrency craze. At its peak, Bitcoin broke through $100,000, and the total market value of cryptocurrencies even temporarily exceeded the global US dollar circulation. Subsequently, numerous cryptocurrency trading platforms emerged, along with over-the-counter trading mediated by USDT.
Under current policies in our country, some people use crypto assets for private exchanges between foreign currencies and RMB, earning from exchange rate differences and service fees. While seemingly technically harmless, this is legally high-pressure. Such operations may involve the crime of illegal business operations under Article 225 of the Criminal Law, as well as money laundering under Article 191.
In this article, the Mankun Law Firm team will combine practical experience to help you understand: Why do crypto transactions frequently cross the "cross-border exchange" high-pressure line? What do you need to be aware of?
Are Cryptocurrencies "Property" or "Data"? How Does the Law Define Them?
I. Terminology
Domestic and foreign literature in related fields use confusing terminology to describe crypto assets like Bitcoin. Concepts such as cryptocurrency, crypto assets, digital currency, digital assets, and virtual currency are often used interchangeably. Because various parties find it difficult to reach a consensus on the nature of cryptocurrencies - whether they are currency, intangible assets, claims, or data symbolizing the holder's rights - judicial authorities have different attitudes, and academic circles have no definitive conclusion.
[The translation continues in the same manner, maintaining the original structure and translating all text while preserving the <> tags and their contents.]What Should Individual Investors Pay Attention to in Cryptocurrency Trading?
I. Avoid Participating in OTC Businesses Such as "Foreign Exchange Proxy" and "Exchange Rate Hedging"
Using cryptocurrency as a medium to earn profits from exchange rate differences by providing cross-border exchange and payment services is essentially circumventing national foreign exchange regulations through "foreign exchange-cryptocurrency-RMB" conversion, which is a disguised foreign exchange trading. Individual investors should be cautious to avoid being criminally liable for "illegal business operations".
II. Strictly Follow Personal Annual Foreign Exchange Quota Regulations
Buying and selling cryptocurrencies appears to be a transaction of cryptocurrencies, but essentially involves currency value conversion between foreign currencies and RMB, which is considered foreign exchange settlement. According to the Implementation Rules of Personal Foreign Exchange Management Regulations, personal settlement and domestic foreign exchange purchases are subject to annual total amount management. The annual total is equivalent to $50,000 per person per year.
III. Avoid Using Anonymous Recharge Channels
When trading cryptocurrencies, choose platforms with regular KYC processes and ensure transparent transaction records. Using anonymous channels such as P2P over-the-counter trading, mixer services, or privacy coin exchanges makes it difficult to trace the legality of fund sources. If suspected of money laundering or supporting illegal activities, platforms may freeze accounts, leading to financial losses. Additionally, anonymous channels are easily exploited by hackers, compromising user fund security.
IV. Retain Legal Proof Materials
If studying abroad, one can provide admission notices, tuition payment notifications, and other materials to prove the legitimacy of cryptocurrency trading. For citizens working domestically, they can retain labor contracts, wage slips, and tax payment certificates to prove they are not engaged in cryptocurrency trading as a profession.
Conclusion
Cryptocurrency itself is not inherently "sinful"; the issue lies in whether the transaction involves cross-border, exchange evasion, anonymity, or regulatory circumvention. Once these behaviors are linked to illegal operations, money laundering, or foreign exchange control, they may cross the line.
Not understanding the law is not scary, but being recklessly ignorant and rushing into gray areas is. Whether individual investors or practitioners, before participating in crypto asset transactions, one should clearly understand legal boundaries and avoid unnecessary criminal risks.
