Which model of virtual currency transactions involves illegal business operations?

Recently, friends in the virtual currency circle sent private messages from home and abroad to ask: In China, which virtual currency transaction models will be treated as illegal business crimes? Regarding this question, Sister Sa gave a brief reply, please pay attention to the red line of the law, and don't defy the law by yourself.

There are not many legal patterns, but there are.

From the perspective of existing laws and regulations + judicial practice, the legal characterization of Bitcoin as a "specific virtual commodity" has not changed. Sister Sa believes that the Civil Code also allows Chinese people to hold Bitcoin. This is a prerequisite for virtual currency to have room to survive in China.

Currently, there are two legal business models involving virtual currencies. One is the virtual currency wallet business, which is to maintain the security of virtual currency and provide solutions to prevent hacker attacks, etc.; the other is OTC, which exchanges coins with coins. Since these two models are legal, it is legally tolerated to provide information intermediary services or other technical services for these two models.

Tianjin City implements differential electricity prices for virtual currency "mining" electricity: On October 12, the Tianjin Municipal Development and Reform Commission recently issued a notice on the implementation of differential electricity prices for virtual currency "mining" electricity, in order to rectify virtual currency "mining" "Mining" activities, further promote energy conservation and emission reduction, and help achieve the "double carbon" goal. In accordance with the relevant national electricity price policies, it is decided to implement differential electricity prices for virtual currency "mining" electricity. Relevant matters are notified as follows:

1. Implement differential electricity prices for virtual currency "mining" electricity, implement electricity prices for "eliminated" enterprises, and the price increase standard is 0.5 yuan per kilowatt-hour.

2. It will work with relevant departments to determine the list of virtual currency "mining" projects, the start and end dates of implementation and other information, and notify the power grid companies. According to the information on the relevant list, each power grid enterprise will collect the electricity tariff increase in full amount in a timely manner to ensure that the policy is implemented in place.

3. If the start and end date of the implementation of the differential electricity price is less than one meter reading cycle, so that the electricity cannot be measured, the electricity for the implementation of the differential electricity price is determined by multiplying the daily average electricity consumption in the corresponding meter reading cycle by the number of days for which the differential electricity price policy should be implemented. If the virtual currency "mining" project's mining electricity cannot be distinguished from other electricity consumption combined measurement, the differential electricity price policy will be implemented for all its electricity. [2022/10/12 10:32:21]

However, providing value-added services for wallets, that is, "regular interest", etc., is not allowed by the laws of our country. The reason is that the 9.4 announcement negates the financial nature of virtual currency, so all financial services involving virtual currency are generally suspected of breaking the law, but to varying degrees.

The Sichuan provincial government held a province-wide conference on rectifying virtual currency "mining" and trading activities: On the morning of November 17, the Sichuan provincial government held a video conference on rectifying virtual currency "mining" and trading activities in the province, and notified Sichuan's virtual currency "mining" "Mine" to rectify and crack down on virtual currency transactions, and deploy the next stage of work. The meeting emphasized that relevant departments and cities (states) must resolutely implement the decision-making arrangements of the Party Central Committee and the State Council and the work requirements of the provincial party committee and the provincial government, deeply understand the severe situation of the current rectification of virtual currency "mining" and trading activities, and continuously consolidate and rectify As a result, we have effectively formed a joint force for rectification, continued to increase punishment, and resolutely won the tough battle of "rectifying virtual currency 'mining' and trading activities". (Sichuan Provincial People's Government official website) [2021/11/18 21:58:57]

News | Japan Virtual Currency Exchange Association requires all exchanges to conduct emergency security checks: According to crypto reports, due to the huge amount of virtual currency theft in Zaif, the Japan Virtual Currency Exchange Association JVCEA requires other domestic exchanges to conduct emergency virtual currency management business on the 22nd. examine. At present, Liquid by Quoine, bitFlyer, Bitbank, GMO, BitTrade, BITPoint, Bitgate, Minanobtc and c0ban exchanges have all issued statements saying that they have implemented inspections but found no related security risks such as illegal outflow of virtual currency. [2018/9/21]

USDT\USDC may be recognized as "legal currency"

Sister Sa chatted with several prosecutors and judges, and there was a consensus that "foreign money is also legal currency". This has a legal basis, so we won't go into details. Now we are concerned about whether stablecoins such as USDT are considered as algorithmic currencies. From the perspective of strict administrative law, of course, a virtual currency anchored to the US dollar cannot be regarded as a legal currency. However, from a practical point of view, one-to-one anchored to the US dollar has liquidity. With payment and settlement functions, there is a high probability that USDT will be treated as a legal currency in the field of criminal law.

Therefore, any business that uses stablecoins for knocking (violating the "Regulations on Foreign Exchange Administration") may be deemed to be a violation of Article 225 of the Chinese Criminal Law for illegal business operations.

Digital Currency Lending Issues

In July 2019, the Supreme Law, the Supreme People's Procuratorate, the Ministry of Public Security, and the Ministry of Justice jointly issued the "Opinions on Several Issues Concerning the Handling of Criminal Cases of Illegal Lending". Lending funds to unspecified people 10 times, with interest exceeding 36% per annum (recently revised regulations, now 15.4% per annum), is illegal usury and suspected of illegal business operations.

Due to the different legal characterization of virtual currencies such as Bitcoin, mainstream currencies such as Bitcoin are "specific virtual commodities"; while the native tokens of ICOs are "data". Neither has the legal status of "funds". However, since stablecoins and other currencies are directly linked to legal tenders, and mainstream currencies such as Bitcoin also have relatively mature markets, in practice, there is still a relatively high probability that digital currencies are really regarded as "currency" and various types of virtual currencies are issued. Coins will also be treated as illegal lending. However, for the various native tokens of the grass-roots ICO, they will not be treated as currencies, and they will most likely be dealt with as crimes of fraud.

Write at the end

The hedging business of virtual currency may involve "illegal futures business". The quantitative business of virtual currency, if colluding with exchanges, may involve fraud. ICO itself does not violate the crime of issuing stock securities without authorization under the laws of our country.

Tags：

TUSD