Is the currency circle illegal? Basic knowledge of the currency circle
Jul 29, 2025 pm 03:00 PMCryptocurrencies do not have legal currency status in China. 1. It is clear that illegal currency such as Bitcoin is irreparable and cannot be compensated; 2. Prohibit financial institutions from conducting token business; 3. Prohibit illegal token issuance and financing (ICO); the illegal activities that are key to crack down include: 1. Illegal financial activities, such as unauthorized establishment of exchanges, cross-border foreign exchange transactions, and fund pyramid schemes; 2. Pre-washing crimes, virtual currency business is included in the pre-washing supervision, and transfer of stolen money can constitute pre-washing crimes; 3. Fraud and illegal fundraising, such as false project financing and air currency issuance; personal transactions are in a legal gray area: 1. Holding is not illegal but not protected by law; 2. OTC transactions may involve illegality Business may freeze bank cards due to stolen money; 3. Pokémon is included in the elimination industry and is banned in many places; the latest judicial practice shows: 1. In 2023, the court identified USDT as a "fund" in the sense of criminal law; 2. In 2024, the Ministry of Public Security cracked down on cross-border use of virtual currencies; risk warnings include: 1. Property losses cannot be recovered, such as LUNA burst; 2. Trading profits require tax declaration, and 20% property transfer income tax may be applied; the conclusion is that China prohibits cryptocurrency-related commercial activities. Although individual holdings are not explicitly prohibited, they face multiple risks. It is recommended to be vigilant about being involved in illegal activities. The regulatory situation continues to be high-pressure and the application of laws is dynamically developed.
1. The illegal currency status of cryptocurrencies
According to the 2017 "Announcement on Preventing the Risk of Token Issuance and Financing" of the People's Bank of China and seven other ministries and commissions:
It is clear that virtual currencies such as Bitcoin are not legal currency and are not legal tender
Prohibit financial institutions and payment institutions from conducting token-related business
No organization shall illegally engage in token issuance financing (ICO)
2. Illegal behaviors that are key to crack down on
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Illegal financial activities
Open a cryptocurrency exchange (approval is required but not actually approved)
Organize cross-border foreign exchange transactions (suspected of illegal business operations)
Funding pyramid schemes using cryptocurrencies as the medium (typical case: PlusToken case)
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Crime before baptism
In 2021, the central bank clearly includes virtual currency-related businesses in pre-reverse supervision
Using cryptocurrency to transfer stolen money may constitute a pre-laundering crime (Article 191 of the Criminal Law)
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Fraud and Illegal Fundraising
False blockchain project financing (may be committed to the crime of fundraising fraud)
Air Coin Issuance (suspected of fraudulent issuance of securities)
3. The legal gray area of personal transactions
It is not illegal for individuals to hold cryptocurrencies, but they are not protected by law
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OTC transactions have risks:
May be considered illegal operation (revolution exceeds 300,000 or profit exceeds 100,000)
Receiving stolen money causes bank cards to be frozen (in 2022, "card cut-off operations" were launched)
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Digging Activities:
In 2021, the National Development and Reform Commission clearly includes virtual currency "poaching" as an elimination industry
Inner Mongolia, Xinjiang and other places have issued local prohibitions
4. Latest judicial practice
A local court case in 2023: Determining USDT as "fund" in the sense of criminal law
2024 Ministry of Public Security special action to crack down on cross-border use of virtual currencies
5. Risk warning
Property loss risk: LUNA burst in 2022 causes huge losses to domestic investors to be unable to recover
Tax risk: Personal transaction profits need to be declared independently (may involve 20% of property transfer income tax)
Conclusion : In China, commercial activities such as issuance and trading intermediaries of cryptocurrencies are illegal. Although individual holding is not directly illegal, it faces multiple legal risks. Investors are advised to fully understand the policy red lines and be wary of being involved in illegal and criminal activities. Regulatory authorities continue to maintain a high-pressure situation, and the application of relevant laws is still under dynamic development.
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