What are the legal virtual currency platforms in China? An inventory of legal virtual currency platforms

Despite the global trend of legalizing virtual currency platforms, China maintains its strict regulations, prohibiting all such operations within the country.

Feb 05, 2025 at 11:37 pm

Key Points:

• Virtual currency platforms in China are subject to strict regulations.
• As of 2023, there are no legal virtual currency platforms in China.
• The Chinese government has consistently taken a tough stance against cryptocurrency trading and mining.
• Several countries have implemented legal frameworks for virtual currency platforms.

Current Legal Situation in China

China has implemented a comprehensive ban on cryptocurrency trading, mining, and initial coin offerings (ICOs) since 2021. All virtual currency exchanges and over-the-counter (OTC) trading platforms have been prohibited from operating in the country.

As a result, there are currently no legal virtual currency platforms in China. Any individuals or entities caught engaging in cryptocurrency-related activities may face legal penalties.

International Comparison

While China has adopted a strict approach towards cryptocurrencies, several other countries have established legal frameworks for virtual currency platforms. These frameworks vary in their scope and regulations, but they generally aim to ensure consumer protection and prevent money laundering and other illicit activities.

Some of the countries with legal frameworks for virtual currency platforms include:

• United States: The Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) have jurisdiction over cryptocurrency exchanges and other platforms.
• Japan: The Financial Services Agency (FSA) regulates cryptocurrency exchanges and requires them to register with the government.
• South Korea: The Financial Services Commission (FSC) oversees cryptocurrency exchanges and requires them to comply with anti-money laundering (AML) and know-your-customer (KYC) regulations.
• European Union: The European Union has adopted the Markets in Crypto-Assets (MiCA) Regulation, which provides a harmonized legal framework for virtual currency platforms across the bloc.

Steps to Establish a Legal Virtual Currency Platform in China

Until the Chinese government changes its current stance on cryptocurrencies, it is not possible to establish a legal virtual currency platform in the country. The following steps would be required if the regulations were to be revised:

• Obtain a license from the Chinese government: Virtual currency platforms would need to obtain a license from the appropriate regulatory authority, such as the People's Bank of China (PBOC) or the China Securities Regulatory Commission (CSRC).
• Comply with AML and KYC regulations: Platforms would be required to implement strong AML and KYC measures to prevent money laundering and other illicit activities.
• Separate customer assets from platform funds: Platforms would need to segregate customer assets from their own funds to protect user funds in the event of insolvency.
• Implement robust security measures: Platforms would be required to have robust security measures in place to protect against hacking and other cybersecurity threats.
• Cooperate with law enforcement: Platforms would need to cooperate with law enforcement agencies in investigations and prosecutions related to cryptocurrency-related crimes.

FAQs

Q: Why did China ban cryptocurrency trading?

A: The Chinese government cited concerns about financial stability, consumer protection, and money laundering as reasons for banning cryptocurrency trading.

Q: Are there any legal ways to buy and sell cryptocurrencies in China?

A: As of 2023, there are no legal ways to buy and sell cryptocurrencies in China.

Q: What are the consequences of engaging in cryptocurrency activities in China?

A: Individuals and entities caught engaging in cryptocurrency-related activities in China may face legal penalties, such as fines or imprisonment.

Q: Is it possible to establish a legal virtual currency platform in China?

A: It is not currently possible to establish a legal virtual currency platform in China due to the ban on cryptocurrency trading.