Will China tax on cryptocurrency transaction?
Generally speaking, if an individual wants to buy and hold cryptocurrency in China, he can have a legalized way to realize it. But in the selling process, the possibility of violating the law is very high. Any cryptocurrency issuing and trading services organized in China are basically in violation of China’s current laws and regulations.
The risk of tax evasion
Some countries do require tax returns for profit-making activities such as cryptocurrency transactions. But in China, there is no need to worry about tax payment for the time being. Domestic taxes shall be paid in RMB. Most cryptocurrencies are denominated in US dollars. If tax is to be paid, the cryptocurrency must be converted into the corresponding US dollar, and then into RMB. In this process, it involves not only the pricing of cryptocurrency, but also the exchange with fiat money in disguise. And these two processes are prohibited by the Chinese government. Therefore, in the context of the current policy, tax payment is only a hypothetical issue.
Foreign currency control risk
Most Chinese investors buy and sell cryptocurrencies in the same kind of fiat money, so they will not involved in foreign currency control. But what situation will violate the relevant foreign exchange control regulations?
Only when someone buy cryptocurrencies by different fiat money, and the intention is to use cryptocurrency as an intermediary to exchange and purchase foreign currency, can it be suspected of violating the rules. If you want to fully realize it, you have to look at the risk control settings of the trading platform and the local KYC policies of the relevant bank cards. But it can be said for sure that once there is illegal exchange, in essence, the risk of the platform is far greater than that of the investors, which may not only be illegal, but also a crime.
Risk of money laundering
Many Chinese investors whose bank account were frozen by police for they encountered black money when OTC trading. But in order to constitute the crime of money laundering, the situation need to meet two basic conditions, that is, the users must knowing it is black money, and help to transfer black money. Simply transferring cryptocurrency and other assets to foreign countries does not necessarily be sentenced to money laundering crimes if the money source is legitimate.