Source: Lawyer Liu Honglin

0 1 It’s not easy to do OTC in this currency circle

In recent days, there have been a lot of news circulating on the Internet about the illegal financial activities of buying and selling virtual currencies. Friends in the currency circle are panicking.

For example, this: The police in Qingdao, Shandong and the Qingdao Branch of the State Administration of Foreign Exchange jointly cracked a huge underground bank case involving 15.8 billion yuan, and arrested 74 suspects, involving 17 provinces and cities across the country. Municipalities. According to Xu Xiao, a staff member of the Qingdao Branch of the State Administration of Foreign Exchange, after underground banks collect RMB from "customers", they purchase virtual currencies and then sell the virtual currencies through overseas trading platforms to obtain what they need. of foreign currency funds. This process realizes the conversion of RMB and foreign currencies, which constitutes the illegal act of illegally buying and selling foreign exchange. The criminal suspect confessed that he earned the exchange rate difference by doing "this kind of currency exchange", with profits ranging from 3/1000 to 5/1000.

Another example is this headline on December 27: "The Supreme People's Procuratorate: Using virtual currency as a medium to carry out illegal transactions is an illegal financial activity." Without reading the details of the news text, you can easily mistake it for Buying and selling virtual currencies is an illegal financial activity, but if you read the original article carefully, you will know that the official view is that more and more illegal foreign exchange crimes are committed through virtual currencies.

This is like, "More and more robberies "Criminals like to buy and sell kitchen knives to kill people" was interpreted by the media as "buying and selling kitchen knives is a crime." Don't you think this is nonsense?

02 Why is it not illegal to buy and sell virtual currencies?

In the case at the beginning of the article, there is nothing wrong with the fact that the practices of underground banks constitute illegal trading of foreign exchange, but this cannot be understood to mean that purchasing virtual currencies is illegal buying and selling of foreign exchange, nor can it be understood that selling Virtual currency is the illegal buying and selling of foreign exchange.

The reason is very simple, so simple that it is somewhat unpretentious, that is: virtual currencyis not foreign exchange.

First, let’s look at what virtual currency is. The latest Chinese official statement on virtual currency is the "China Financial Stability Report (2023)" released by the People's Bank of China this month, in which the definition of virtual currency (don't be careful, virtual currency is a crypto asset) is:

"Crypto-assets refer to private sector digital assets that mainly rely on cryptography, distributed ledger or similar technology development and operation, creating new asset forms and business model. Crypto assets are not issued by monetary authorities and do not have currency attributes such as legality and compulsory nature."

Let’s look at what foreign exchange is. We will not check other authoritative dictionaries, but just look at Baidu Encyclopedia. After all, he understands Chinese better.

"Foreign exchange, the English name is Foreign currency, is a currency administrative authority (central bank, monetary management agency, foreign exchange stabilization fund and fiscal Creditor's rights held by the Ministry of Finance in the form of bank deposits, Treasury bills, long-term and short-term government securities, etc. that can be used when the balance of payments is in deficit. Including foreign currencies, foreign currency deposits, foreign currency securities (government bonds, treasury bills, corporate bonds, stocks, etc.), foreign currency payment certificates (bills, bank deposit certificates, postal savings certificates, etc.).”

So, under China’s existing regulatory policies, virtual currencies either It's air, or it's virtual property. We are not sure whether it can constitute virtual property, but it is definitely not a general equivalent currency recognized by the central bank.

Of course, in this article we are not going to discuss the legal characterization of virtual currency. That is what legal researchers do. We only need to know one thing: virtual currency is not a contraband prohibited by law in China. Since It is not contraband. As a Chinese citizen, of course you can purchase and hold it according to your own preferences. Such behavior itself does not constitute an illegal crime.

It is not illegal to buy virtual currency.Is it illegal to sell virtual currency?

My opinion is that it is not illegal either.

Let’s take an example to understand. A person goes to a gold store to buy gold jewelry. He can wear and collect it himself, or he can pass it on to the next generation as a family heirloom. Naturally, he can also travel abroad. When I sold it in the local market, do you think this could be illegal trading of foreign exchange?

Taking a step back, even if this behavior is suspected of being illegal, it is still the buyer's problem. How do I know that a gold seller is buying gold for speculation? Do sellers need to make users promise that they will never sell and cash out overseas? This is somewhat nonsense.

It is undeniable that with the increasingly standardized development of virtual currencies (especially stablecoins) in overseas countries and regions, some "smart" friends will use some caution to sell virtual currencies in China through OTC merchants or virtual currencies. In overseas exchanges, you can use RMB to purchase virtual currency, and then convert it into local legal currency overseas and deposit it into a bank account, thereby transferring your assets overseas.

But the problem is: the buyer does this quietly, and he doesn’t I have not (and cannot possibly) tell the seller honestly.

Are there no legal risks for people who sell virtual currencies? of course not.

We also take the above story of selling gold as an example. Suppose someone comes to your store to hoard gold crazily and refuses to bargain. You will be very happy. You will see the local situation later. Only after reading the news did you know that this was a criminal gang, and the money he gave you was not clean. At this time, the local police will naturally come to your door and ask you to cooperate with the investigation, and even ask you to return the relevant stolen money. If you don't return it, they will say that you are suspected of committing a crime and have you beheaded.

The same principle applies to virtual currency OTC merchants.

You have a customer who buys a large amount of USDT from you, but you only focus on shipping the goods without asking your friend where your money comes from. As a result, the buyer turns over and you don’t know that they are. Downstream of overseas casinos, the police followed the direction of the funds and found you at this time. You said that you were completely unaware of this matter and that you were innocent. But I'm sorry, you didn't do a good job in risk prevention for your business, and you didn't fulfill your legal obligations against money laundering. Someone has to pay for the related responsibilities and costs. If you don't pay, I'll slap you on the head.

It is said that the bigger the storm, the more expensive the fish. If you want to make money selling fish, you must be careful of the overwhelming waves.

More seriously, if you know that your buyer does not have enough money, Clean, but still maintaining a strategic partnership, very cooperative with the other party's behavior of buying USDT, and even enthusiastically helping customers connect with overseas virtual currency exchange services for legal currency, then the probability of you being suspected of committing a crime will undoubtedly soar.

The eight typical cases of punishing foreign exchange-related crimes released by the Supreme People's Procuratorate and the State Administration of Foreign Exchange are as follows: the person who provided virtual currency conspired in advance with the person who illegally bought and sold foreign exchange, or Knowingthat others are illegally buying and selling foreign exchange, but still providing substantial assistance to them in converting domestic currency and foreign currency by trading virtual currency and other methods, constitutes a joint crime of illegal business operations. Those who provide virtual currency trading services to those who illegally buy and sell foreign exchange, but only have a general understanding of the crime they are helping, and do not specifically recognize the crime of helping illegal foreign exchange trading, can assist in the investigation of criminal liability for information network criminal activities.

So: whether you buy USDT or sell USDT, under China’s current laws and regulatory policies, this behavior itself does not constitute an illegal crime. However, if you often walk by the river, how can you not get your shoes wet? . During the buying and selling process, if you know that there is a problem with the other party's USDT, or you know that there is a problem with the other party's money for buying virtual currency, but you still have a good service attitude and provide butler-style services. If you are unfortunately targeted by the police, it can only be said that you are unlucky.

03 Mankiw’s lawyer suggested

So much nonsense Some may not, so as a virtual currency OTC merchant, what should you do to reduce the probability of being involved in illegal crimes?

Let’s take a look at how a well-known OTC in this industry, which is said to have never failed, prevents trading risks (it is only for sharing industry information and does not constitute any entrepreneurial advice).

Based on Lawyer Honglin’s in-depth understanding of the virtual currency industry, if you want to In order to reduce the risk of being suspected of illegal crimes as much as possible in the process of buying and selling virtual currency, the following points are worthy of careful consideration:

1. Try to do business with customers with a certain threshold, which can avoid many people participating in scoring. Small retail investors.

2. Either do business among acquaintances or do business in overseas licensed exchanges. After all, mainstream exchanges have done KYC/KYT and anti-money laundering for users, which can greatly reduce the laundering of user funds. risk.

3. The withdrawal must be from a bank card in the name of the buyer, and try to use the deposited funds in the bank card (for example, more than 7 days). At present, more and more cautious OTC merchants in the industry require this. Download the recent bank statements of unknown customers.

4. Friends who are truly prepared to use virtual currency OTC as a career to make a fortune can consider registering a company and applying for a license to conduct business in specific overseas countries and regions. There are two reasons: As the number of virtual currency users increases, There are more and more people around the world, and the market demand will be bigger and bigger; virtual currency will be recognized as a legal asset by more and more countries and regions, and will be protected by law. It will be compliant and licensed overseas to operate in compliance with the law. Citizens can earn a lot of money.

5. If you are targeted by the police for buying or selling virtual currencies, remember to find a lawyer as soon as possible.