Does buying and selling foreign exchange by purchasing virtual currency constitute an illegal business crime?

Regarding virtual currency trading and illegal foreign exchange trading, there is one case that is not controversial, that is, underground banks realize foreign exchange-renminbi conversion by buying and selling virtual currencies.

Why are virtual currency transactions accepted by a large number of underground banks?

Because in the traditional model, one-way business can easily lead to liquidity problems.

The so-called one-way business means that underground banks only provide illegal foreign exchange buying or selling business for a period of time.

For example, underground banks help foreign trade merchants exchange foreign exchange, collect foreign exchange from foreign trade merchants overseas, and pay the corresponding amount of RMB in China. The previous method of the bank is to form a pool of foreign exchange and RMB funds to achieve a balanced capital flow. The US dollars are sold to other customers, exchanged for RMB, and then the RMB is paid to the domestic account of the foreign trade merchant. Under this type of knock-on mode, the underground bank constitutes a crime of illegal business operation, which is clearly stated in the judicial interpretation of illegal foreign exchange trading in 2019. Under the circumstances, underground banks need to keep the balance of the US dollar and RMB fund pools at all times, or to achieve a balance in business correspondence, that is, to find both foreign exchange sellers and foreign exchange buyers, and the proportion of one-way business cannot be excessive within a certain period of time. Otherwise, it will lead to insufficient liquidity, such as only buying US dollars and paying RMB for a long time, which will eventually lead to insufficient RMB reserves in underground banks and cannot carry out business.

The cross-border and convenience features of virtual currencies, especially the emergence of stablecoins, have solved this problem to a certain extent.

For example, after an underground bank received a demand from customer Zhang San to sell US dollars, the underground bank bought a certain virtual currency, such as Bitcoin , Ethereum or Tether, with the US dollars on a virtual currency exchange, and then through the exchange at a certain time Points sell virtual currency into RMB in China, thus realizing the value conversion of foreign exchange-virtual currency-RMB. During this period, underground banks can not only earn fees for helping users exchange currency, but also buy and sell virtual currency It is possible to realize profit from price difference, which not only solves the liquidity problem of one-way business, but also enables underground banks to realize new profit points due to capital advantages (of course, there is also a risk of loss). Therefore, a large number of underground banks have begun to become virtual currency exchanges. important customers.

How is this behavior qualified?

For this model, that is, virtual currency + counter-exchange foreign exchange trading underground bank, there is a point of view that there is a certain degree of controversy, that is, whether it constitutes the crime of illegal business operations such as illegal foreign exchange trading.

Lawyer Zeng believes that this model constitutes a crime of illegal business operations, and there is no dispute.

The 2019 Judicial Interpretation of the Crime of Illegal Business Operations defines the knock-on model as the crime of illegal business operations, which means that the mode of cross-border fund redemption and the only one-way flow of similar currencies abroad and within the country is classified as illegal foreign exchange trading. The reason is to carry out such business activities The underground banks or foreign exchange operators are still profit-oriented and frequently carry out foreign exchange activities against unspecified objects. The object of this crime is foreign exchange itself. Although there is no direct exchange of RMB and foreign exchange in terms of behavior, However, the nature of the behavior is still a business behavior of carrying out illegal foreign exchange activities.

There is essentially no difference between knock-on underground banks and underground banks that directly engage in foreign exchange trading. The difference in judicial practice lies in the presentation of evidence, that is, the payment flow of foreign exchange and the payment flow of RMB will occur in different spaces, while the traditional Buying and selling underground money houses are common near foreign exchange banks and foreign trade specialty stores (or trade markets with developed border trade) in the 1980s and 1990s. They are characterized by paying money and delivering goods at the same time. The physical space presented by the evidence may be the same, but this Nor is it absolute. The two models actually go hand in hand. Even if there is no judicial interpretation of illegal foreign exchange trading in 2019, there is no dispute over the criminalization of knock-on underground banks.

And back to the question discussed in this article, that is, whether underground banks convert foreign currencies through virtual currencies and provide RMB-foreign currency conversion services to the outside world, will it affect the criminal nature of illegal foreign exchange transactions by underground banks?

The answer is no, and it will not affect it at all. Whether it is the knock-on underground bank or the reselling underground bank discussed above, it is possible to use the method of buying and selling virtual currency for fund conversion and fund pool balancing operations. Virtual currency is replaced by other virtual assets, such as game virtual recharge cards, international fund shares, precious metal holding shares, etc., in fact, there is no difference. In fact, what is provided is a liquidity solution, or money laundering. solution, and buying and selling virtual currency, here, is not fundamentally different from buying and selling virtual goods such as game cards. They are neutral investment behaviors that are not suspected of crime, but they will be used by criminals as money laundering and settlement. Fund balance tool.

However, it is also necessary to correctly distinguish the essential difference between the purchase of foreign exchange through underground banks in the cross-border trading of virtual currency and the qualitative nature of the behavior discussed in this article. Specifically, we can see the previous article "Is cross-border brick-and-mortar trading suspected of illegal foreign exchange?" ", this article has a more in-depth discussion on virtual currency and illegal foreign exchange trading. There is an essential difference between moving bricks across the country and converting foreign exchange through virtual currency. Although there are certain similarities in appearance between the two, this similarity Sex is the similarity in the eyes of non-legal people, and even people with a little common sense can normally recognize the difference between the two.

However, the regulation of virtual currency transactions, including the regulation of virtual commodity transactions in the future, is believed to be more stringent and professional.