Is virtual currency illegal?
The most frequently asked questions in private messages are whether virtual currency is illegal in China. We will discuss this from three dimensions: Is virtual currency illegal?
[Handshake R] Friendly reminder: Slide the images for clearer view, text limited to key points
[One R] Is trading virtual currency illegal?
Currently, domestic regulations on virtual currency mainly rely on notifications, announcements, and other normative documents, and laws and regulations do not specify them:
Policy trends gradually tightening: From allowing personal trading (2013) → prohibiting institutional services (2017) → comprehensive crackdown on speculation (2021)
If the law does not prohibit it, it is free: Personal trading is legal but unprotected, and you must bear the risk yourself. Laws and regulations do not prohibit trading virtual currency. The aforementioned notifications from 2013, announcements from 2017, and notifications from 2021 have normative document status and do not prohibit virtual currency trading, meaning that trading virtual currency is not illegal in China.
Legal status of USDT: Chinese law does not explicitly mention it, and judicial practice usually refers to Bitcoin's 'virtual commodity' attribute
[Two R] Will profits from virtual currency be confiscated or punished?
Legitimacy of administrative penalties: According to Article 16 of the Administrative Penalty Law, documents from 2013, 2017, and 2021 are normative documents, with no authority to impose administrative penalties. If law enforcement agencies confiscate or punish based solely on these documents, it is illegal behavior.
Confiscation risk scenario: If profit-making behavior involves money laundering, illegal operation, pyramid schemes, etc. (criminal law) offenses, judicial authorities may confiscate illegal gains. If an individual simply buys and sells virtual currency, law enforcement agencies have no authority to confiscate.
[Three R] Why is virtual currency trading always associated with illegal activities?
Buying and selling USDT personally is not illegal, but the trading method determines the risk
The direct reason for card freezing is that the anonymity of virtual currency makes it a tool for money laundering
Criminal risks: Abnormal trading = presumption of crime
Law enforcement agencies can infer your 'subjective knowledge' through the following abnormal behaviors
High-frequency OTC trading: Not trading on mainstream exchanges, frequent OTC transactions
Concealed communication: Contact via encrypted software to avoid regulation
Abnormal prices: Transaction prices significantly deviate from market prices
High-risk receipts: Using someone else's bank card or continuing transactions with previously frozen cards
No capital operation: 'Arbitrage without investment' per the upper-level instructions
Large transaction volume: Frequent USDT trading, bank card transaction flow exceeds normal
Gang operation: Establishing studios, trading involves money laundering
Currency exchange intermediary: Use USDT to assist in RMB ↔ foreign currency exchange
Gambling service: Selling USDT knowing the buyer is using it for gambling
Using mixers, anonymous wallets, and other tools to conceal the flow of funds
[Student Party R] (Virtual currency trading pitfall guide) Brief description
[Checklist R] Principles to be followed
Refusal of OTC trading: Prefer licensed exchanges
Strict control of funding sources: Refusal to change stores, change bank cards, novices, abnormal prices
Full traceability: Including transaction records, chat records
Quick stop-loss: If the card is frozen, immediately submit legal transaction proof for appeal
[Bomb R] High-risk behavior warning
Face-to-face offline transactions, frequently changing payment accounts
Participation in 'capital preservation arbitrage' and 'buying and selling on behalf of others' projects #
Using relatives/friends' bank cards for payment