The Chinese government's ban on Bitcoin trading since 2017 and further intensified crackdown on cryptocurrency trading in 2021 has had a huge impact on Bitcoin holders and traders within China. Despite this, many are still exploring how to legally conduct personal Bitcoin trading. This article provides an in-depth analysis of the legal framework in China following the ban on Bitcoin trading, and explains how to safeguard the legality of personal transactions under the current regulations to help users in Taiwan understand and comply with the corresponding legal framework.
China's Policy Background on Bitcoin Trading
Since 2017, the Chinese government has gradually strengthened its regulatory policies on Bitcoin and other cryptocurrencies. Initially, the People's Bank of China required financial institutions to stop providing trading services for cryptocurrencies, and subsequently the Chinese government closed down large Bitcoin exchanges within its territory. This series of measures was introduced to prevent financial risks, combat money laundering, and maintain the stability of the financial system. In particular, in 2021, the Chinese government once again intensified its crackdown on cryptocurrency mining and trading, explicitly prohibiting financial institutions from providing cryptocurrency-related business, including derivatives trading and over-the-counter trading.
The Legality of Bitcoin Trading in China
In China, although the government has banned the trading of Bitcoin and the provision of related services by financial institutions, it has not explicitly regulated the legality of ordinary citizens owning Bitcoin. This means that under current law, Chinese citizens can still own Bitcoin, just not trade it publicly. Therefore, even if trading of cryptocurrencies is prohibited, it is not illegal for individuals to own Bitcoin. However, if it involves trading behavior with third parties, it may violate the relevant Chinese laws, especially when making cross-border payments or large-value transactions.
Key Takeaway: Despite the Chinese government's ban on trading, it is not illegal for individuals to hold Bitcoin; it is whether or not they trade it that matters. Bitcoin trading in China is still a gray area, so individuals should be careful with any behavior related to cryptocurrencies.
How to Invest in Bitcoin After China's Trading Ban
Within China, despite the ban on direct Bitcoin trading, there are ways to indirectly invest in cryptocurrency. Some international exchanges still accept Chinese users to register and trade, which means that Chinese nationals can use tools such as VPNs to conduct cross-border transactions. Such behavior carries legal risks, and may be subject to government regulation and penalties if discovered. Some have chosen to shift their Bitcoin investments to blockchain projects and derivatives markets, indirectly participating in the value-added of cryptocurrencies through ETF-like products.
Legal Risks to be aware of: While it is possible to invest indirectly through external platforms, such behavior may be subject to legal risks, particularly in the case of cross-border transactions or suspected money laundering. It is therefore important for investors to choose legal trading channels and avoid high-risk behavior.
How to Trade Bitcoin Legally in Taiwan
Taiwan's cryptocurrency market is relatively open and regulated, and there are no strict prohibitions on trading cryptocurrencies such as Bitcoin. Taiwan's financial regulators emphasize that Taiwanese citizens can legally trade, invest and use Bitcoin, provided that they comply with relevant anti-money laundering and counter-terrorist financing regulations. Many of Taiwan's cryptocurrency exchanges (e.g. Euronext, Binance, etc.) offer convenient trading platforms with strict KYC (Know Your Customer) and AML (Anti-Money Laundering) requirements, which facilitate legal and compliant Bitcoin trading.
Guide to Using Taiwan Exchanges: In Taiwan, it is legal to trade Bitcoin on reliable exchanges, and it is recommended to choose a reputable platform and complete an identity verification. Exchanges such as Euronext not only provide real-time trading services, but also have rebate programs that enable users to earn a percentage of the rebate while trading. This is a great way to add value for both novice and experienced users.
How to Protect the Legality and Security of Bitcoin Transactions
Safeguarding the legitimacy and security of Bitcoin transactions is a top priority for every cryptocurrency user, whether in China or Taiwan. Use legitimate platforms for transactions and avoid unregulated over-the-counter (OTC) platforms to prevent the risk of fraud or money laundering. Comply with local laws and regulations and avoid high-risk cross-border payments or improperly sourced funds. Again, for users with large quantities of Bitcoin, using cold wallets to store funds is an effective means of preventing theft and ensuring the security of information such as backup recovery codes.
Cryptocurrency Security Tip: Users are advised to change their exchange passwords regularly, enable double authentication (2FA), and keep funds only in reliable cold wallets, which can effectively prevent hacking attacks and loss of funds.
The Future of China's Bitcoin Trading Ban
While China's policy on Bitcoin trading remains banned for now, it is likely to be adjusted in the future as the global cryptocurrency market develops. The Chinese government has shown a growing interest in blockchain technology in recent years and has been actively promoting the development of a central bank digital currency (CBDC). This means that even if the current ban on Bitcoin trading remains in place, clearer regulations and even the opening up of more cryptocurrency-related businesses could emerge in the future. As global support for the legalization of cryptocurrencies grows stronger, it's possible that China's policies in this area will be gradually relaxed.
POLICY FORECAST: Some experts believe that the Chinese government is likely to relax its ban on Bitcoin and other cryptocurrencies in the future as blockchain technology matures and the central bank's digital currency is pushed forward. This is undoubtedly news to look forward to for cryptocurrency enthusiasts in China.
Conclusion: How to Trade Bitcoin Legally and Safely
To summarize, China's ban on Bitcoin trading does not mean that it is illegal for individuals to hold Bitcoin, but they need to be extra cautious when it comes to trading. For users in Taiwan, it is relatively simple to trade Bitcoin legally. Choosing a legitimate exchange, complying with local laws and regulations, and ensuring the security of the transaction are the key concerns of every investor. As the global cryptocurrency market develops, future policy changes may bring new opportunities and challenges, and investors should maintain a flexible attitude to understand and comply with relevant laws and regulations in a timely manner.
Important Note: Before making any cryptocurrency investment, understanding local laws and regulations and choosing a reputable platform is key to safeguarding the legitimacy and security of your transaction.