«Business activities related to virtual currencies are illicit financial activities,» the People`s Bank of China said, warning that it «seriously endangers the safety of people`s assets.» The cryptocurrency transaction itself has no legal protection, Zheng explained. However, the conversion of crypto to fiat is being monitored as part of a stronger national remittance framework. They have long been accustomed to operating at the border of legality, after all, all private transactions in China were illegal until the beginning of the reform period. The measures mark the latest campaign by Chinese regulators against crypto trading, which they consider volatile and out of government control. Regulators have accused these currencies of generating «illegal and criminal activities» such as fraud and money laundering and risking financial instability. The statement makes clear that those involved in «illicit financial activities» are committing a crime and will be prosecuted. «Virtual currency does not have the same legal status as legal tender,» he said, naming the cryptocurrencies Bitcoin, Ethereum and USDT. The statement said it is illegal for a foreign exchange to provide trading services to investors in China via the internet, reiterating the regulators` previous position. Bitcoin shares fell 5% on Friday after the announcement. Regarding the latest news from China, he noted that all USDT transactions in China are illegal. However, banning such transactions may be too difficult for regulators, the executive suggested. «There is no way to technically ban USDT payments in any country,» he said.
The expert also believes that USDT and its main competitor USD Coin (USDC) are «not at all popular in China». The court sided with Shen because of the fact that the RMB is China`s only legal tender and because the central bank, the Supreme Court and 10 ministries issued guidelines last year with the glorious title «Notice on Preventing and Eliminating Hype Risks in Virtual Currency Transactions,» clearly indicating that the virtual currency does not enjoy the same legal status. The media report quoted the court as stressing that USDT «should not and cannot circulate in the market.» Respect for property rights may come as a surprise to some. Finally, the Chinese government largely views private cryptocurrencies as a means of money laundering, tax evasion, and illegal fundraising. However, this is not surprising to those familiar with China. The system is ambiguous. Owning cryptocurrencies is not illegal under Chinese law, says March Zheng of Bizantine Capital, but regulators are keeping an eye on exchanges. «There are currently no legal instructions that define mainland Chinese citizens who own crypto assets as illegal,» Zheng told Blockworks. «The text can be interpreted to mean that, because there is no legal framework regarding ownership, there is a potential investment risk because the law cannot protect consumers.» And foreign websites offering such services to Chinese citizens online are also illegal activity, he said. China on Friday stepped up its crackdown on cryptocurrency trading, banning cryptocurrency mining nationwide and reiterating that all virtual currencies in the country are considered illegal. China wouldn`t be China if there weren`t ways to get around strict regulations.
Owning crypto is always legal and legally protected. Most Westerners greatly underestimate the flexibility of the Chinese system. Chinese entrepreneurs are masters of the grey area. This means that cryptocurrencies have never really had the chance to be legalized in China. But it also means that there is no reason for the government to ban them completely. On the contrary, the authorities have opted for repeated repression in order to keep the mass of the population away from these undesirable activities. At the same time, they allow certain people to play the game as long as they are not involved in fraudulent activities or money laundering. Citing China`s blanket crypto ban, which was enforced in September 2021, the court pointed out that digital currencies such as USDT do not have the same legal status as legal tender. The court found that the plaintiff`s claim to receive salaries and bonuses in the form of RMB was fully in line with local laws and the court upheld this claim.
China`s central bank has announced that all cryptocurrency transactions are illegal, banning digital tokens like Bitcoin. Yes, you read that right, owning Bitcoin (or any other cryptocurrency) is still legal and legally protected in China. And if you can legally own something, you also have the right to sell it to someone else. After all, it is legal property, and anyone can decide for themselves what to do with it. You only get legal problems if you try to build a professional trade in cryptocurrencies. The People`s Bank of China`s recent announcement on crypto should not be seen as a definitive ban on crypto in the country, but as another warning, March Zheng of Bizantine Capital Blockworks explained in an interview. In line with its traditional clumsy approach, the Chinese government has a dark view of technologies that are not under its direct control. However, local media recently suggested that the ongoing «crypto» crash — triggered in part by the failure of Terra`s UST algorithmic «stablecoin» — could push the government to put even more pressure on individuals and businesses who insist on using stablecoins like USDT. This announcement echoes previous court rulings from Shandong, a province in eastern China, issued in August, which stated that «the conduct of cryptocurrency investment or trading is not protected by law» after the defendant sought compensation for a failed transaction involving digital assets.
«Regular investors should protect their personal assets and stay away from virtual currencies,» the presiding judge wrote. Right now, Huobi and OKEX, two major exchanges focused on China, are still accessible in China without a VPN, Zheng said. Binance is always accessible. Wait a minute – hasn`t China banned everything crypto? Well, yes and no. The government has banned all services related to cryptocurrencies, such as trading platforms, advertising or sales, and even cryptocurrency mining. Therefore, the court ordered the defendants to pay a total of more than 270,000 RMB ($40,000) in salaries, performance bonuses and annual bonuses owed to the plaintiff. China is one of the largest cryptocurrency markets in the world. The explosive growth .com blockchain has reportedly been held back by the bear market, with much lower valuations on the horizon. Related: Circle`s USDC on track to topple Tether USDT as Top Stablecoin in 2022 USDT is the third largest cryptocurrency after Bitcoin (BTC) and Ether (ETH) in terms of market capitalization and is the largest digital asset in terms of daily trading volume. At the time of writing, USDT`s daily trading volume is $57 billion, which is 247% more than Bitcoin`s total daily trading volume. We are now weeks away from the one-year anniversary of Tether General Counsel Stuart Hoegner, who assured CNBC that a full audit of Tether`s reserves was only «a few months away.» It`s been about five YEARS since Tether promised but didn`t provide proper accounting of the beans in its magic chests.
Another announcement released Friday by China`s National Development and Reform Commission banned all crypto mining as part of China`s commitments to reduce carbon emissions to meet climate change goals. Prohibitions were previously ordered by the provinces. The Chinese court has concluded that virtual currencies such as USDT cannot circulate in the market as currency, forcing all employers to pay their employees only with the official renminbi currency (RMB). Changhao Jiang, co-founder and CTO of Cobo, a Chinese cryptocurrency custodian and digital wallet provider, has seen its business jump this year. As a reward, new «coins» are randomly awarded to those who participate in this work – known as cryptographic «mining». In May, regulators again vowed to crack down on the industry, asking banks and payment companies to do more to stop cryptocurrency-related transactions. Nevertheless, cryptocurrency trading has continued to be popular among Chinese residents who buy and trade through exchanges outside of China. These measures were not the first steps taken by Beijing against the digital currency. In 2017, China shut down its local cryptocurrency exchanges, stifling a speculative market that accounted for 90% of global bitcoin trading. In 2020, $17.5 billion of digital assets were transferred from Chinese exchanges to foreign trading platforms, up 53 percent year-on-year, indicating an increase in capital flight from China, consulting firm PeckShield said in its anti-money laundering report.
However, the lack of investor data and information on these exchanges complicates China`s anti-money laundering efforts and blunts the effectiveness of capital controls, the lawyer said. This year, however, there has been a significant crackdown. As previously reported by Cointelegraph, in September 2021, the People`s Bank of China officially announced a series of measures to combat crypto adoption in China. The action involved the establishment by 10 Chinese state authorities of a new mechanism to prevent financial actors from participating in cryptocurrency transactions.