Is It Illegal for Chinese to Buy Bitcoin Overseas?
China has early taken the stance that bitcoin-like cryptocurrency is not a currency, ICOs and cryptocurrency transactions are banned by the country’s central bank. While bitcoin is not illegal in the country.
Considering the crackdown on ICOs and cryptocurrency trading in the country, some people wonder whether it is illegal for Chinese to participate in ICOs or buy cryptocurrency via a foreign platform with the help of VPN.
The answer is no. Individuals can hold and trade bitcoins in China via over-the-counter (OTC) trading and overseas exchanges despite the ICOs ban. Last September, Chinese government has put an end to the fraud and manipulation of the cryptocurrency market by banning all ICOs and transaction of cryptocurrencies. Regulations ban financial firms like banks, payment processors like Alipay, and crypto trading platforms from providing business related to bitcoin transaction and exchange.
Early in 2013 when bitcoin started gaining popularity in China, People’s Bank of China (PBOC) has explicitly made it clear that bitcoin is a virtual commodity, which has no legal status as money and should not be used in the market as money. In the “Notice on Preventing Financial Risk of Bitcoin”, it is highlighted that due to various factors such as limited supply, anonymity and lack of a centralized issuer, bitcoin is not an official currency but a virtual commodity that cannot be used in the open market.
That means, regulators do not recognize bitcoin as a currency, and define it as a virtual commodity like in-game credits. In a statement on the central bank’s website the PBOC said financial institutions and payment companies cannot give pricing in, buy and sell bitcoin or insure bitcoin-linked products.
However, individuals are allowed to conduct bitcoin trading at their own risks. “There are multiple risks in token issuing, financing and transaction, including the risks of virtual asset, operation failure, as well as speculation. Investors should beware of frauds and all risks shall be borne by investors.”
As a previous report by 8btc, Beijing court rejected 52.8567 BTC compensation lawsuit filed by a bitcoin investor against Huobi, only reiterated the risk of investment in cryptocurrency.
Government crackdown actually targets at curbing the fraud and manipulation of the crypto market. That also explains why Chinese can still buy and sell bitcoins on overseas platforms without legal risks.
Though PBOC recently announced that 88 domestic cryptocurrency trading exchanges and 85 ICO platforms have exited from China, there sees no signs that the 3 million investors in the country are stopping their crypto career.