Why isn’t virtual currency allowed in China?

Illegal cryptocurrencies have already, to some extent, perfectly bypassed foreign exchange controls. If cryptocurrencies were legalized, it could even render the Golden Tax Phase IV system useless.

If you sell an apartment in a first-tier city and receive 5 million RMB in cash, and you want to convert this money into 700,000 USD to transfer abroad:
The bank purchase limit for foreign currency is $50,000, and the remittance limit is also $50,000. With both safeguards, it would take you 14 years to complete the transfer.
If you use someone else’s quota to exchange for USD cash and try to carry it out of the country yourself, carrying more than $5,000 per person will be regulated.
If you use someone else’s quota to remit funds to your overseas account, and it involves more than three people, you will attract attention. If you want to carry RMB out of the country and exchange it for foreign currency, each individual is limited to carrying no more than 20,000 RMB at a time.
If you want to remit RMB abroad, sorry, not a single cent can be transferred out. All the legal channels you can imagine are blocked. Now, back to cryptocurrency:
If there are no quota restrictions, you can perfectly bypass the controls. If there are quota restrictions (assuming the foreign currency reference is $50,000), then you can use the quotas of 14 people to help you exchange 5 million RMB, and then store it on a USB drive and take it abroad. As long as you don’t say anything, no one will know.

In summary: Cryptocurrency, in a certain sense, is similar to precious metals as a general equivalent. It shares properties with precious metals: decentralization and transaction anonymity. This causes a completely uncontrolled situation for a centralized national treasury.

As times progress, precious metals have gradually exited the realm of circulation mainly due to physical limitations—they’re much less convenient than fiat currency. But cryptocurrencies aren’t constrained by physical laws and are almost as convenient as payment platforms like Alipay and PayPal.

Even if we set aside the issue of foreign exchange controls, if everyone were allowed to use cryptocurrencies, the Golden Tax Phase IV would become a joke. Who could tolerate that? #美联储降息预测