Can foreign entities operate virtual currency business in China?

With the launch and implementation of the “Notice on Renovating Virtual Currency “Mining” Activities” and the “Notice on Further Preventing and Disposing of the Risks of Virtual Currency Trading Hype” on September 24, 2021, Sister Sa’s team has received many currency circles recently. , Friends in the mining circle have legal consultations about the content of the new regulations. In order to facilitate understanding of the risks, we have sorted out some of the focus issues in the form of question and answer in this article for readers’ reference:

The main body of operating virtual currency is overseas, can the mode of only providing technical services by domestic companies still be sustainable?

Answer: It cannot be sustained. For a long time, in the world of criminal law, especially in the field of practice, since technical personnel will have an understanding of the business model of illegal crimes while providing technical support, the concept of technology neutrality cannot be supported by judicial organs.

Article 1 Paragraph 3 of the “Notice on Further Preventing and Disposing of Risks in Virtual Currency Trading Legal persons, unincorporated organizations and natural persons that provide services such as marketing promotion, payment settlement, technical support, etc., shall be held accountable in accordance with the law.” This clause confirms the previous views of Sister Sa’s team. In the future, as this model is pointed out by this clause and included in the vision of law enforcement officials, the legal risk of this model will further increase

Can Chinese individuals mine in foreign countries?

Answer: The purpose of the “Notice on Regulating Virtual Currency “Mining” Activities” is to promote the optimization of my country’s industrial structure, promote energy conservation and emission reduction, and achieve the carbon peak and carbon neutral targets as scheduled, while mining in foreign countries will not affect To our country’s market economic order, energy consumption and industrial institutions. Therefore, Sister Sa’s team believes that Chinese individual mining in foreign countries is not prohibited by current laws and regulations.

Is OTC behavior illegal?

Answer: OTC refers to the act of buying virtual currency with legal currency or converting virtual currency into legal currency. The second paragraph of Article 1 of the “Notice on Further Preventing and Disposing of the Risks of Virtual Currency Trading Speculation” states: “The development of virtual currency-related business activities such as legal currency and virtual currency exchange business is suspected of illegal financial activities.” Accordingly, the team believes that , For individuals or companies that use OTC as their business, their OTC actions are illegal, and incidental personal OTC is not illegal.

As for the judgment standard of whether to use OTC as the industry, in addition to the conditions of publicity and profit, the team believes that the frequency standard can be explained in accordance with the idea of ​​the system. The determination of “granting loans to unspecified objects of society”: “Lending funds to unspecified persons (including units and individuals) in loans or other names more than 10 times within 2 years”. In other words, individuals or companies that have OTC more than 10 times within 2 years may be deemed to be engaged in OTC business.

Does OTC constitute a criminal offence?

Answer: OTC may constitute a criminal offense. There are two types : one is the crime of illegal business operations, and the other is the crime of money laundering or the crime of concealing or concealing the proceeds of crime or proceeds of crime.

First, as far as the crime of illegal business operations is concerned, the premise that “violation of national regulations” requires a higher level of law. The 924 document is not sufficient to meet the standards of administrative regulations and laws, but behaviors that use OTC as a business, such as virtual currency, are recognized It is legal currency, which may violate the relevant provisions of the Administrative Regulations “Payment and Settlement Measures”, and may constitute the crime of illegal business operations.

Second, as far as the crime of money laundering or the crime of concealing or concealing the proceeds of crime and proceeds of crime is concerned, there are not a few individuals who transfer the proceeds of crime through virtual currency. , The perpetrator may constitute a money laundering crime.

Is it possible to continue mining in China?

Answer: No, it is an administrative violation to continue mining. According to the “Notice on the Regulation of Virtual Currency “Mining” Activities”, the general idea of ​​”prohibition of increment and proper disposal of stocks”, mining in China will be an administrative illegal act. Once discovered, it will be subject to administrative penalties by relevant departments, and types of penalties Including but not limited to such measures as fines, confiscation of mining machines, and cancellation of business licenses.

In the future, how effective is the contract for Chinese mining companies to sell and host mining machines?

Answer: The vast majority of virtual currency mining machines have a single purpose, and mining activities are administrative violations. Even if the production activities are not subject to administrative penalties, their related civil contractual relationships may lose their validity.

Article 31 of the Notice of the Supreme People’s Court on Printing and Distributing the Minutes of the National Courts’ Civil and Commercial Trial Work Conference: “Under normal circumstances, violations of the rules do not affect the validity of the contract, but the contents of the rules involve financial security, market order, and the state. Public order and good customs such as macro policies should be deemed invalid.” The background of the “Notice on Renovating Virtual Currency “Mining” Activities” combines the national macro policies “Energy Conservation and Emission Reduction” and “Carbon Peak and Carbon Neutrality Targets”. Can be included in the category of “Public Order and Good Customs”.

In accordance with the legal provisions of Article 153 Paragraph 2 of the “Civil Code of the People’s Republic of China” “Civil legal acts contrary to public order and good customs are invalid”, Sister Sa’s team believes that in the “Notice on Regulating Virtual Currency “Mining” Activities” Contracts concluded after the promulgation of which the purpose of the contract relates to new mining projects may therefore be deemed invalid.

Write at the end

Both supervision and justice are dynamic. The above Q&A is based on the judgments made by Sister Sa’s team in accordance with current laws, regulations and judicial standards. We can prompt risks, but we cannot completely eliminate risks. If there is a dynamic demand for legal services, please contact Sa The sister team or other legal professional service providers establish a cooperative relationship.

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