According to the "Notice on Further Preventing and Dealing with Speculation Risks in Virtual Currency Transactions", mainland China prohibits financial institutions and payment institutions from providing services for virtual currency transactions, and domestic and foreign virtual currency exchanges provide services to Chinese residents. The notice emphasizes the risks of virtual currency transactions, including violent price fluctuations, speculation, money laundering, terrorist financing and other illegal and criminal activities. Therefore, the Chinese government prohibits virtual currency transactions to maintain financial order and social stability.
Bitcoin buying and selling transactions are illegal in mainland China. In September 2021, the People's Bank of China and ten other departments issued the "Notice on Further Preventing and Dealing with Speculation Risks of Virtual Currency Transactions" (Yinfa [2021] No. 237), which clearly prohibits financial institutions and payment institutions from providing services for virtual currency transactions. Provide services and require domestic virtual currency exchanges and overseas virtual currency exchanges to provide services to Chinese residents.
According to the notice, virtual currency trading activities involve the following risks:
Virtual currency prices fluctuate violently, which can easily lead to speculation and damage the legitimate rights and interests of investors.
Virtual currency transactions can easily be used for money laundering, terrorist financing and other illegal and criminal activities, endangering financial security and social stability.
Therefore, the Chinese government has taken measures to ban virtual currency transactions in order to maintain financial order and social stability.
Specifically, the following acts are illegal:
Financial institutions and payment institutions provide services for virtual currency transactions
Domestic virtual currency exchanges and overseas virtual currency exchanges provide services to residents in China
Use virtual currencies to carry out illegal and criminal activities such as money laundering and terrorist financing
Violations of the above provisions will be punished by relevant departments in accordance with the law.
In addition, the Chinese government has also been researching and exploring the application of blockchain technology in the financial field. In October 2020, the Central Committee and the State Council issued the "Opinions on Building a More Complete Market-oriented Allocation System and Mechanism of Factors", proposing to "actively promote the application of blockchain technology in the financial field." This shows that the Chinese government has a positive attitude towards blockchain technology, but it also emphasizes the need to guard against the risks of speculation in virtual currency transactions.
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