Overview of Virtual Currency Trading
Virtual currencies, also known as crypto assets, digital tokens, or cryptocurrencies, are a new type of digital asset based on blockchain and distributed ledger technology. Virtual currency trading refers to the buying and selling of these digital assets by users through various platforms; it has become a rapidly growing yet controversial sector in global financial markets.
Global Regulatory Landscape
Regulatory approaches to virtual currency trading vary greatly across countries and regions worldwide, ranging from outright bans to active embrace and regulation, resulting in a diverse regulatory landscape.
China: Continued Prohibition and Strict Crackdown
China has long maintained a policy of prohibiting virtual currency-related business activities (including issuance, fundraising, and trading) and has continued to crack down on virtual currency “mining” activities. On February 6, 2026, eight government departments—including the People's Bank of China (PBOC)—issued the “Notice on Further Preventing and Addressing Risks Related to Virtual Currencies and Other Matters,” reaffirming that virtual currency-related business activities constitute illegal financial activities.This notice explicitly prohibits, for the first time, the issuance of RMB-pegged stablecoins overseas and the tokenization of real-world assets (RWAs), and stipulates that losses from investing in virtual currencies are borne solely by investors, thereby further strengthening regulatory measures.
EU: A Unified Framework and the MiCA Act
The European Union has adopted a “recognition plus regulation” approach, aiming to establish a unified regulatory framework for crypto-assets across member states.On June 9, 2023, the EU officially released the “Regulation on Markets in Crypto-Assets” (MiCA). This legislation aims to establish common rules for cryptocurrency regulation across its 27 member states, covering the full lifecycle management of crypto-asset issuers and service providers, and mandating transparency in transaction information to prevent and control risks.
United States: Multi-Tiered Regulation and Jurisdictional Disputes
The United States employs a multi-tiered regulatory model for virtual currencies, involving multiple federal agencies—including the Securities and Exchange Commission (SEC), the Commodity Futures Trading Commission (CFTC), the Financial Crimes Enforcement Network (FinCEN), and the Office of the Comptroller of the Currency (OCC)—as well as state-level regulatory bodies.The SEC primarily regulates tokens deemed to be securities, while the CFTC regulates tokens classified as commodities (such as Bitcoin and Ethereum futures). However, jurisdictional disputes exist among these agencies regarding the classification of tokens.
Japan: Self-Regulation and Tax Policy
Japan is at the forefront of cryptocurrency regulation and has recognized the Virtual Currency Exchange Business Association and the STO Association as self-regulatory organizations. Additionally, Japan imposes a progressive tax rate on gains from cryptocurrency trading.
Market Status and Latest Developments (as of July 2026)
As of July 29, 2026, the total global cryptocurrency market capitalization was approximately $2.13 trillion, with a 24-hour trading volume of approximately $106.647 billion. Bitcoin’s market dominance stood at 60.31%, with its price hovering around $64,000.Over the past 30 days, inflows to Bitcoin-based exchanges totaled approximately 60,000 BTC, below the annual average of 79,000 BTC, resulting in a net outflow of approximately -1,300 BTC.
Recent market developments include:
- Bitcoin ETFs continue to gain traction, but outflows may be impacted by the delay of the CLEAR Act.
- As of July 28, 2026, Binance’s tokenized stock product, bStocks, surpassed $500 million in assets under management within seven weeks.
- Robinhood’s second-quarter earnings report showed that revenue from event-based contracts exceeded revenue from cryptocurrency and stock trading for the first time, while its cryptocurrency trading revenue fell 38% year-over-year.
- Visa stated it will adopt a “multi-currency, multi-chain” strategy to help clients securely access the stablecoin ecosystem, without taking a position on which stablecoin will emerge as the winner.
- On July 29, 2026, Hawkins County, Tennessee, passed a ban prohibiting the establishment, construction, installation, expansion, and operation of cryptocurrency mining facilities and data centers in the county’s unincorporated areas.
Historical data shows that the total market capitalization of crypto assets reached $800 billion in January 2018 before falling to $250 billion.In 2021, the market capitalization grew 3.5-fold to $2.6 trillion. However, the market also carries risks; in 2024, actual losses from global cryptocurrency fraud totaled $9.3 billion, a 66% increase from 2023.
Risks of Cryptocurrency Trading
While cryptocurrency trading offers the potential for high returns, it also carries significant risks:
- Volatility Risk: Cryptocurrency prices are highly susceptible to various factors, including market sentiment, regulatory policies, and macroeconomic events, and may experience sharp fluctuations within a short period.
- Regulatory Risk: Global regulatory policies remain unclear and are constantly evolving, which may have a significant impact on the legality of cryptocurrencies, trading methods, and market access.
- Liquidity Risk: Some cryptocurrencies have low trading volumes, which may make it difficult to buy or sell quickly at the desired price.
- Technical Failure and Hacking Risks: Trading platforms, wallets, or underlying blockchain technology may contain vulnerabilities, exposing them to the risk of hacking or system failures, which could result in asset losses.
- Fraud Risk: The market is rife with various fraudulent schemes, such as Ponzi schemes and phishing websites; investors should be wary of promises of high returns.
Key Participants and Perspectives
- Investors: Attracted by the high return potential of virtual currencies, but must fully understand and accept the risks associated with extreme volatility, regulatory uncertainty, liquidity constraints, technical failures, and fraud.
- Regulators: Global regulators are generally concerned about the potential risks to financial stability posed by virtual currencies, as well as risks related to money laundering and terrorist financing, and the need for consumer and investor protection.China has adopted a comprehensive ban, arguing that virtual currencies fail to meet requirements for customer identification and anti-money laundering, and may pose a challenge to sovereign currencies and macroeconomic management. The European Union and the United States, among others, are attempting to strike a balance between innovation and risk control.
- Traditional Financial Institutions: Traditional financial giants such as Mastercard, Visa, and JPMorgan Chase have begun to adopt blockchain technology on a large scale, exploring its potential in areas such as payments, settlement, and asset management.
- Cryptocurrency Exchanges and Service Providers: As bridges connecting users to the market, they must comply with anti-money laundering (AML) and know-your-customer (KYC) measures, but may also engage in regulatory arbitrage by operating in jurisdictions with more lenient regulations.
- Technology Developers and Project Teams: They continue to launch new crypto assets and business models, driving industry innovation, but also face challenges related to compliance and market acceptance.
