What is China's policy of prohibiting virtual currency?

China has no policy of prohibiting the sale of virtual currency, and the transaction of virtual currency is legal in China. 1) directly points out that USDT belongs to virtual currency and is not protected by China laws. Article 1 of the Notice clearly classifies TEDA currency, namely USDT, into the category of virtual currency, and points out that virtual currency has no legal compensation and should not and cannot be used as currency in the market.

(2) Providing "pricing services" for virtual currency is also illegal and will be banned in the future. Article 2 of the Notice stipulates: "Virtual currency-related business activities are illegal financial activities. Virtual currency-related business activities such as legal tender and virtual currency exchange business, virtual currency exchange business, buying and selling virtual currency as a central counterparty, providing information intermediary and pricing services for virtual currency transactions, token issuance financing and virtual currency derivatives trading are suspected of illegal financial activities such as illegal issuance of token tickets, unauthorized public issuance of securities, illegal operation of futures business, and illegal fund-raising. " It can be seen that even doing "pricing service" for virtual currency is considered an illegal act and there are corresponding legal risks.

(3) The "information intermediary" mode of virtual currency trading has ended and is no longer gray, which has been classified as illegal. Like "pricing services", the Notice also clearly identifies the provision of information intermediary services as illegal financial activities, which affirms the illegality.

(4) Domestic personnel who communicate overseas cannot escape legal responsibility. The Notice not only recognizes that it is illegal for overseas virtual currency exchanges to provide services to domestic residents through the Internet, but also stipulates that the domestic staff of relevant overseas virtual currency exchanges shall be held accountable according to law.

(5) Contracts involving virtual currency investment transactions are invalid on the grounds of violating public order and good customs. The notice pointed out that there are legal risks in participating in virtual currency investment and trading activities, because once such activities violate public order and good customs, according to the second paragraph of Article 153 of the Civil Code, civil legal acts are invalid and losses are borne by themselves.

(6) The concept of encrypted assets will become a "sensitive word", which will be paid attention to in this round of supervision. Article 11 of the Notice stipulates: "The market supervision department shall strengthen the registration management of market entities, and the registered names and business scope of enterprises and individual industrial and commercial households shall not contain words or contents such as' virtual currency',' virtual assets',' cryptocurrency' and' cryptoassets'." It can be seen that terms such as encrypted assets have become "sensitive words" for regulators.

(7) Focus on cracking down on crimes, from the previous crime of organizing and leading pyramid schemes to the crime of illegal business operation and fraud. Compared with the crime of organizing and leading pyramid schemes, the Notice identifies related virtual currency transactions as illegal financial activities, so its focus gradually shifts to illegal business operations, financial fraud and other criminal activities. This shows that the types of virtual currency industry and business will change in the future. Based on this, Sister Sa thinks that the DeFi business may become the target of public criticism.