Legal Characterization of Virtual Currency Trading Platforms in Chinese Mainland
In the Chinese mainland, providing virtual currency trading platforms or engaging in related business activities constitutes a clear violation of the law. According to the "Notice on Further Preventing and Disposing of the Risk of Speculation in Virtual Currency Trading" and other relevant policy documents issued in 2021 by departments including the People's Bank of China (PBOC), virtual currencies such as Bitcoin, Ether, and USDT do not possess the same legal status as fiat currency.
No legal entity, unincorporated organization, or natural person may engage in fiat-to-virtual currency exchange business, exchange business between virtual currencies, trading virtual currencies as a central counterpart, providing information intermediary and pricing services for virtual currency transactions, token issuance financing (ICO), or virtual currency derivatives trading. All such activities are classified as illegal financial activities and shall be strictly prohibited and banned in accordance with the law. Furthermore, offshore virtual currency exchanges providing services to residents within China via the internet are similarly characterized as illegal financial activities.
Legal and Criminal Risks of Providing Virtual Currency Trading Platforms
Establishing and operating virtual currency trading platforms or engaging in related intermediary services entails severe legal and criminal liability risks. Due to the substance of their operations, relevant platforms and individuals are often suspected of illegal token issuance, unauthorized public offering of securities, illegal futures business operations, illegal fundraising, and other illegal and criminal activities. If the circumstances are serious and constitute a crime, judicial authorities will pursue the criminal liability of the responsible parties in accordance with the law.
Joint and Several Risks for Related Service Personnel and Institutions
The legal regulation of virtual currency trading targets not only the platforms themselves but also extends to third parties providing supporting services. If legal entities, unincorporated organizations, or natural persons know or should know that relevant entities are engaged in virtual currency-related businesses and yet still provide them with marketing promotion, payment settlement, technical support, or other services, they will likewise be required to bear corresponding legal liabilities, facing administrative penalties and even criminal prosecution.
