China has been sitting in the driver seat when it comes to leading blockchain technology and bolstering towards the relentless global domination quest of its national currency. But things become complicated when there is “virtual currency” or cryptocurrency in the picture.
According to the latest development, selling crypto purchased with the Renminbi [RMB] to withdraw foreign currency could be considered money laundering. In addition to that, selling crypto purchased with foreign currency to withdraw RMB could also likely be deemed money laundering.
NEW: Chinese state media suggests that selling crypto purchased with RMB to withdraw foreign currency could be considered money laundering, as would selling crypto purchased with foreign currency to withdraw RMB. https://t.co/UYR1nJlidx… pic.twitter.com/0Tm9k73lmP
— LongHash (@longhashdata) November 3, 2020
The report was loosely translated from the Chinese media platform, People’s Daily which explicitly stated,
“The holder buys “virtual currency” in China by paying in RMB, and then sells it in foreign currency in any form, or the holder buys “virtual currency” overseas by paying in foreign currency, and then passes any The form of selling and cash withdrawal is RMB. Under the above-mentioned circumstances, no matter how many currency-to-currency transactions are converted between buying and selling, it essentially violates China’s foreign exchange control regulations and is suspected of money laundering crime”
The report further went on to mention that if a Chinese citizen sells and cashes out “virtual currency”, regardless of the region and currency, as long as there is a profit, the individual must declare personal income tax to the Chinese tax authority. If the tax declaration is not filed, it could be suspected of Tax evasion.
Cryptocurrency Rules in China
According to the Library of Congress, China does not recognize cryptocurrencies as legal tender. The country’s banking system does not accept cryptocurrencies or provide relevant services. Notably, China has carried out a series of regulatory measures to crack down on activities related to the crypto industry citing the reasons as investor protection and financial risk prevention.
Those measures include announcing that initial coin offerings [ICOs] as illegal and restricting the primary business of cryptocurrency trading platforms. Despite the fact that China dominates the Bitcoin mining scene, the government has also discouraged mining in the country.
China’s stance on cryptocurrencies, in general, might be strict but not when it comes to digitizing its national currency. Its digital yuan pilot program has been picking up the pace which was rolled out for extended testing in four cities. According to reports, there have been more than 4 million transactions, totaling over 2 billion Yuan or $299 million in the digital currency so far.