Written by: Xu Qian Partner Lawyer at Shanghai Mankun Law Firm Law;
Xu Xiaohui, lawyer atun Shanghai Mankun Law Firm<2>Introduction> >Since the birth of Bitcoin, its its price has repeatedly surged, driving a global cryptocurrency boom. At its peak, Bitcoin has exceeded $100,000, and the total total market value of global cryptocurrencies even temporarily surpassed global dollar circulation. Subsequently, a large number of cryptocurrency trading platforms emerged, along with OTC trading mediated by USDT.
Under current policies in China, some people use crypto assets for private conversion between foreign currencies and RMB, earning from exchange rate differences and service fees. While seemingly technically harmless, it actually faces legal high pressure. Such operations may involve the crime of illegal business under Article 225 of the Criminal Law, as well as money laundering under Article 191.
In this article, the Mankun Law Team will combine practical experience to help you understand: Why do crypto transactions frequently cross the "cross-border currency exchange" high-pressure line? What do you need to be aware of?
[The rest of the translation follows the same professional and accurate approach, maintaining the original structure and technical terminology]What Should Individual Investors Pay Attention to in Cryptocurrency Trading?
I. Avoid Participating in "Foreign Exchange Proxy" and "Exchange Rate Hedging" OTC Businesses
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 suspected of "illegal business" and facing criminal liability.
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 quota 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, one can retain labor contracts, wage statements, 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 trading process involves cross-border transactions, exchange rate circumvention, anonymity, or regulatory evasion. Once these behaviors are linked to illegal business, money laundering, or foreign exchange control, they may cross the legal line.
Not understanding the law is not scary, but being recklessly ignorant and rushing into gray areas is. Whether individual investors or practitioners, everyone should understand the legal boundaries before participating in crypto asset trading to avoid unnecessary criminal risks.
