Is Trading Crypto in China Illegal?

First, the conclusion: it is not illegal for individuals to hold and buy/sell virtual currencies.

The result of a recent seminar between the Shanghai Second Intermediate People’s Court and the Chinese Academy of International Law came out exactly like this—this isn’t just me saying it’s “not illegal.” Here we need to define a few points clearly. To give an example from my own case: when I was working in Beijing, in a single month the bank card transaction flow reached over 5 million—about 5 million-plus—and it kept going out continuously. First, China Construction Bank found me, and then Bank of China found me. They said the transaction flow was abnormal. I told them I was trading crypto, and I provided the buy/sell transaction records and my profit situation. In the end, they explained the state’s policies to me, and then made me sign a statement of acknowledgment—I left after that.

Why was I fine? Because I earned the money through my own buying and selling, so I wasn’t breaking the law. If it wasn’t earned by you personally, but obtained through any other means—meaning any situation other than earning through your own trading—then it could potentially be viewed as illegal. There are several cases like this. For example, if you know that the “oil premium” is 1–10 fen or even higher, and you buy and sell the “oil,” it’s not illegal—provided you don’t know what the other party is doing. In one case, someone sold at a premium higher than 5 fen; later, “Uncle” (law enforcement) checked and found that the other party was involved in telecom fraud—yet it was still not illegal. Another case: someone sold the “oil” at more than 10% above the market price through TG, and it turned out the other party was an overseas money-laundering group—also not illegal, because you didn’t know! But if you know, then you’re breaking the law. And this is also proven by the evidence—what anyone says doesn’t count. If the amount is more than around 5 million, then it’s likely to lead to serious consequences.

The “oil” I personally earned was all made through my own abilities, so I’m not afraid of “Uncle” coming to find me; the transaction flow is there on the record. But when I trade “oil,” I’m extremely cautious. Even if, in a situation where I didn’t know the other party would use it for illegal purposes, I still sold it to them—based on the cases, it’s not illegal. What I fear is if they determine that I had knowledge; then I’m done. Most likely I would be fined, the proceeds would be recovered, and there would definitely be losses. The corresponding offense would be illegal business operations; and if it’s serious, it could be money laundering and illegal foreign exchange trading. After all, many people use virtual currencies to enter and exit overseas foreign exchange.

In one sentence: money you earn from your own trading is not illegal. Buying and selling “oil” without knowing the other party’s intended use is not illegal. Everything else carries the risk of illegality; the determination power lies with “Uncle” and the court.