Full text of "Legal Analysis of Holding and Trading "Virtual Currency" in China"

Original title: " Getting to the bottom of the matter No. 3: Legal analysis of holding and trading "virtual currency" in China "

Original author: Shan Zhiguang, Chairman of BSN, and He Yifan, General Manager of Hongzao Technology Note: On November 3, the   People's Daily Online area published an article titled "Cleaning up the Source No. 3: Legal Analysis of Holding and Trading "Virtual Currency" in China". General Manager He Yifan. content for the current Conducted legal analysis on the acquisition, sale and purchase of "Cryptocurrency".

The full text is as follows:

"Virtual currency" (Cryptocurrency) is positioned in many publicity "Currency" or "financial investment product", but no matter how everyone perceives it, it is certain that "virtual currency" is not "currency" in the financial field. Although there is no legislation specifically targeting "virtual currency" in China, according to the "Announcement on Preventing Financing Risks of Token Issuance" (hereinafter referred to as "Announcement 94") issued by the People's Bank of China and other seven ministries and commissions on September 4, 2017, The so-called "'virtual currency' is not issued by monetary authorities, does not have monetary attributes such as legal compensation and mandatory, does not have the same legal status as currency, and cannot be used as currency in the market.

In addition, according to the "Notice on Preventing Bitcoin Risks" (Yinfa [2013] No. 289) (hereinafter referred to as "No. 289"), in nature, Bitcoin should It is a specific virtual commodity that does not have the same legal status as currency, and cannot and should not be used as currency in the market. Therefore, according to China's current financial regulatory policies such as Announcement 94 and Document No. 289, "virtual currency" is a financial and investment-related thing that has not been legally registered, and "virtual currency" is prohibited from being exchanged and traded with legal tender in the financial field. Or trade as a central counterparty, or issue financing transactions.

However, due to the decentralization and offline transaction characteristics of "virtual currency", it is difficult to completely disappear it in China from a technical and regulatory perspective. Therefore, in recent years, the number of people who hold and trade "virtual currency" in China still exists widely. Although this is still a niche market, with the rapid development of the digital economy, more and more people participate in "virtual currency", which may have an impact on China's financial supervision and social order.

The purpose of this article is to analyze the holding and trading of "virtual currency" by Chinese citizens in China based on Announcement 94 and Document No. 289. Due to the particularity of the form of "virtual currency" and the technology used, this article will start with multiple scenarios to conduct as comprehensive analysis and discussion as possible.

The "virtual currency" mentioned in this article does not include legal digital currencies that have been issued or will be issued by various countries, and this article does not involve the use of "virtual currency" by entities in China ” in the case of a means of payment or receipt of payment for a purchase, investment, or operation of a traditional business.

1. Acquisition of "virtual currency"

1. The parties concerned are natural persons in China In China, without paying any consideration, obtaining “virtual currency” through mining, airdrops, or accepting gifts, etc., is not explicitly prohibited in Announcement 94 and Circular 289, but the above-mentioned activities are not supported at the financial regulatory level;

2. The party concerned is a natural person, and the "virtual currency" obtained from an organization or individual by paying legal tender within the territory of China is not explicitly prohibited in Announcement 94 and Circular 289, but the sale Organizations or individuals of virtual currency may be suspected of breaking the law by engaging in sales, providing exchanges between legal tender and "virtual currency";

3. The parties concerned are Chinese citizens, and they are outside China through legally exiting funds Purchasing "virtual currency" from any other party is not explicitly prohibited in Announcement 94 and Circular No. 289;

4. The parties themselves hold some kind of "virtual currency" legally obtained, and through currency transactions Obtaining another kind of "virtual currency" in the form of other methods, which does not involve money laundering, is not explicitly prohibited in Announcement 94 and Document No. 289.

Second, the sale and withdrawal of "virtual currency"

1. Holders Giving the “virtual currency” you hold to others for free is not explicitly prohibited in Announcement 94 and Document No. 289, and Document No. 289 defines that Bitcoin has the attributes of a virtual commodity. From a legal point of view, the act of gifting as a virtual commodity should be It belongs to the category of autonomy of will, but the recipient needs to declare personal income tax to the Chinese tax authorities for the assets obtained for free. If the tax declaration is not made, it is suspected of tax evasion;

2. The holder pays Buy "virtual currency" in the country in the form of RMB, and then sell it in any form to withdraw cash into foreign currency, or the holder buys "virtual currency" overseas by paying foreign currency, and then sell it in any form to withdraw cash in RMB, Under the above circumstances, no matter how many currency transactions have been converted between buying and selling, it essentially violates the relevant regulations of China's foreign exchange control and is suspected of money laundering;

3. The holder is a Chinese citizen , After selling the held "virtual currency" and withdrawing cash, regardless of the region and currency, as long as there is profit, it is necessary to declare personal income tax to the Chinese tax authority. If the tax declaration is not made, it is suspected of tax evasion;

4. The holder transfers the legally obtained "virtual currency" to others in a person-to-person transaction without involving money laundering or tax evasion. Announcement 94 and Circular 289 do not make it clear Prohibited, but not encouraged by the policy;

5. The holder is a Chinese citizen, and knowingly sells the "virtual currency" he holds to others, and assists others to illegally export funds in disguise If the foreign country enters the country, it is also suspected of money laundering crimes. If other people's funds themselves are obtained illegally, they may be involved in more crimes.

Third, "Virtual currency" transaction services

1. Any organization or individual in The provision of "virtual currency" information in China, including the provision of matching information for transactions between individuals, is prohibited if it involves the provision of pricing and information intermediary services for tokens or "virtual currency" as stipulated in the 94 Announcement;

2. Any organization or individual that provides "virtual currency" transaction services inside or outside China, establishes RMB channels and capital pools in China, and collects transaction fees is prohibited by law;

3 . Any organization or individual issuing "virtual currency" and raising funds in China is prohibited by law, and is suspected of illegally absorbing public deposits or fund-raising fraud;

4. Any organization or individual in China Issuing "virtual currency" or providing corresponding transaction services, forming an organizational system, and conducting business through transactions between individuals are prohibited by law and are suspected of crimes of illegal business operations, crimes of illegally absorbing public deposits, or fund-raising fraud. If there are different levels and commission mechanisms in the organizational system, it may also be suspected of pyramid schemes;

5. Any organization or individual takes advantage of the transaction characteristics of "virtual currency" to subjectively provide funds that bypass China's foreign exchange control Inbound services are similar to underground bank services and are suspected of money laundering.

Generally speaking, if an individual wants to purchase and hold "virtual currency" in China, there are more legal ways to do so, but in the selling process, it violates the The legal possibility is high. Any "virtual currency" issuance and trading services that are organized in China and involve capital pools basically violate the current laws and regulations in China.

In the judgments of multiple local courts, "virtual currency" is recognized as an asset and protected. Obtaining "virtual currency" through mining does not violate the prohibitive provisions of Announcement 94 and Document No. 289, but it requires a channel to realize it. Purchasing "virtual currency" from mining companies in an individual way does not violate the above-mentioned prohibitive provisions of Announcement 94 and Document No. 289. However, after the acquisition, resale may trigger financial supervision of anti-money laundering and anti-illegal fund-raising, resulting in the account being banned. Seal and other legal responsibilities.

After more than ten years of development, "virtual currency" has a very positive significance in the popularization of blockchain technology, and the development of "virtual currency" is also It has accelerated the active research and promotion of legal digital currencies by currency management departments in various countries. The widespread use of legal digital currency will greatly promote the efficiency of capital circulation and will have a huge positive impact on the business world. And all of this also benefits from the innovation and attempts of the "virtual currency" industry. The difference between legal digital currency and "virtual currency" mainly lies in whether it is legally associated with offline assets. At present, "virtual currency" still exists in the form of financial games or simulation disks, and has nothing to do with labor and production in the real world. To break through this limitation, countries need to carry out detailed legislation on digital assets and pass laws to link offline assets. On the Token, a string of codes similar to the current stock exchange information system represents the legal holding of equity.

No matter how much positive impact "virtual currency" has on the popularization of blockchain technology, at the practical level, holding and trading "virtual currency" The laws and regulations of the host country must be strictly observed. The public should have a certain understanding of China's relevant laws and regulations on "virtual currency", so that when they come into contact with "virtual currency", they can strictly abide by the laws and regulations. "Virtual currency" has a very small audience and is highly professional. It is recommended that the general public should not get involved easily without relevant knowledge, so as to avoid breaking the law unconsciously.

This article only represents the author's point of view.

Original link

Welcome to join the official BlockBeats community:

Telegram Subscription Group: https://t.me/theblockbeats

Telegram Discussion Group: https://t.me/BlockBeats_App

Official Twitter Account: https://twitter.com/BlockBeatsAsia