The Stance Of Chinese Law On Overseas Bitcoin Trading In China
Although bitcoin is not considered illegal in China, bitcoin trading with RMB (national currency of China) is not legal. In addition, the Chinese government in September 2017 purporting to bring an end to the fraudulent and manipulative activities in the cryptocurrency market proceeded to place a ban on all ICOs and cryptocurrencies transactions in the country. The ban prevents financial institutions such as banks, crypto trading platforms, and payment processors from rendering business-related services to crypto exchanges.
In the issued “Notice on Preventing Financial Risk of Bitcoin” by the PBoC, it was stated that as a result of several factors including anonymity, limited supply and the absence of a centralized issue, bitcoin could not be deemed a legal currency. However, it remained a virtual commodity which cannot be traded in the open market. In a statement published on its website, PBOC stated that financial bodies and payment companies were not allowed to buy and sell bitcoin, neither was it acceptable for the financial institutions to insure products that were bitcoin based.
About the Position of the Law on Overseas Bitcoin Trading
Owing to the ICO and cryptocurrency trading crackdown in China, several people have remained unclear about the legality or otherwise of Chinese participation in ICOs and purchase of digital currencies on overseas platforms using VPN.
Analysts have, however, asserted that it isn’t illegal for Chinese citizens to partake in ICOs or hold and trade bitcoins in China through over-the-counter (OTC) trading. This also covers overseas exchanges even with the ban.
Individuals Personally Bear Risks of Bitcoin Investments
The general ban does not affect bitcoin and individuals are allowed to trade the cryptocurrency and bear the risk themselves. Analysts have, however, warned investors concerning the multiplicity of risks associated with the issuance of tokens, financing, and transactions of bitcoins as well as risks associated with virtual assets, operations, and speculations. The Beijing Court’s rejection of the 63,8567 BTC compensation lawsuit instituted by a bitcoin investor against Huobi was a confirmation that individuals would bear all risks associated with bitcoin trading.
The PBoC’s recent announcement that about 88 local cryptocurrency exchanges and 85 ICOs left China did not have any significant effect on the position of the 3 million crypto investors in China who showed no sign of disengaging from crypto related investments.
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