Introduction: At present, in judicial practice: many case-handling units, especially investigative agencies, face virtual currency trading cases. The first impression of many case-handling personnel is: Isn’t it illegal to speculate in currencies? You asked him which legal basis said that currency speculation is illegal. He said that in 2021, didn't the People's Bank of China promulgate some "924" document prohibiting virtual currency transactions? Therefore, the conclusion drawn by the investigative agency is - "If you speculate in coins, I will detain you, no problem?" In response to this misunderstanding of legal provisions, many people simply buy and sell individually when there is no illegal money transaction. People who use virtual currency suffer 37 days of "detention center disaster" in vain. Here we will systematically explain related issues.
1. What legal documents mention virtual currency transactions?
First, according to the "Notice on Preventing Bitcoin Risks" (hereinafter referred to as the "Notice") issued by the central bank and five other ministries and commissions on December 3, 2013, it clearly stipulates that Bitcoin is a specific virtual commodity, so Bitcoin has certain The value of a property protected by law. As a stable currency, USDT is the anchor for the value/price performance of mainstream virtual currencies such as Bitcoin, and should also receive equal protection from the law;
Second, according to the "Announcement on Preventing Financing Risks of Token Issuance" (hereinafter referred to as the "94 Announcement") issued by the central bank and seven other ministries and commissions on September 4, 2017: "No organization or individual may illegally engage in token issuance. Financing activities", it can be seen that the "94 Announcement" does not prohibit individuals from holding and buying and selling virtual currencies (including Tether USDT);
Third, according to the "Notice on Further Preventing and Handling the Risks of Speculation in Virtual Currency Transactions (Yinfa [2021] No. 237)" jointly issued by the Central Bank and other ten ministries and commissions on September 24, 2021 (hereinafter referred to as the "924 Notice") First Paragraph 2 of Article 1 once again clearly stipulates that if virtual currency-related business activities are suspected of illegal sales of tokens, unauthorized public issuance of securities, illegal fund-raising and other illegal financial activities, and constitute a crime, criminal liability shall be investigated in accordance with the law. At the same time, Paragraph 4 of Article 1 It is clearly stipulated that individuals shall bear their own losses when investing and trading virtual currencies.
In addition, the "924 Notice", the "94 Announcement" and the 2013 "Notice" are all normative documents. In terms of effectiveness, they are not laws, administrative regulations, or judicial interpretations, and they are not legal basis directly cited by public security organs in handling criminal cases. Moreover, the "924 Notice" does not negate the legal effect of the "94 Announcement" and the 2013 "Notice". Therefore, under my country's current regulatory policies, personal transactions in virtual currencies do not violate my country's current laws and administrative regulations.
2. Virtual currencies can easily lead to other crimes, but the transaction itself is not a crime.
As we all know: the issuance of coins at the source can easily lead to criminal problems of illegal fund-raising; virtual currency exchanges can easily lead to criminal problems of illegal operations; the marketing methods of virtual currency project parties can easily lead to pyramid schemes crimes by organizational leaders; and the acceptors of virtual currency can easily cause criminal problems. The criminal problem of money laundering and sale of stolen goods; however, without discussing the existence of stolen money in the transaction, whether the pure virtual currency transaction itself is a criminal crime, many investigative agencies also have similar questions when handling virtual currency cases at the beginning:
To determine whether an act constitutes a crime, it is first necessary to clarify whether the act violates the corresponding law. According to Article 3 of the "Criminal Law of the People's Republic of China", if the law does not expressly stipulate that the act is a crime, it shall not be convicted and punished. The law here should be understood in a narrow sense as only referring to the laws enacted by the National People's Congress and its Standing Committee. However, there is currently no clear legal provision in our country that stipulates that the purchase and sale of virtual currencies is suspected of criminal offenses.
Moreover, before September 24, 2021, my country did not ban the trading of virtual currency, and issued documents such as the "Notice on Preventing Virtual Currency Risks" and the "Announcement on Preventing Token Issuance Financing Risks", although they denied The legal status of virtual currency as currency, however, the above regulations do not deny its property attributes as commodities, and our country's laws and administrative regulations do not prohibit the holding and trading of virtual currencies. The "Notice on Preventing Virtual Currency Risks" further mentioned that "from a nature point of view, virtual currency should be a specific virtual commodity."
This confirms the legality of trading virtual currencies as virtual commodities. During this period, such as the "Second Instance Case of Property Damage Compensation Dispute between Yan Xiangdong et al. and Li Shengyan et al." heard by Shanghai No. 1 Intermediate People's Court, and the first instance case of "Contract Dispute between Feng Yiran and Beijing Lekuda Network Technology Co., Ltd." heard by Beijing Haidian District People's Court ". In addition, Hangzhou Internet Court and other courts have unanimously held that: The People's Bank of China and other ministries and commissions have issued documents such as the "Notice on Preventing Bitcoin Risks" and the "Announcement on Preventing Financing Risks of Token Issuance", although they have denied such " "Virtual currency" has the legal status as currency, but the above provisions do not deny its property attributes as commodities. Therefore, digital currency has the attributes of virtual property and virtual commodities and should be protected by law. Individual transactions should be protected, and virtual currency transactions are not illegal.
Although, on September 24, 2021, 10 ministries and commissions including the central bank jointly issued the "Notice on Further Preventing and Dealing with Speculation Risks of Virtual Currency Transactions". The notice emphasized the potential risks of virtual currency transactions and denied the legality of virtual currency transactions. However, the second point states that virtual currency-related business activities include legal currency and virtual currency, and the exchange between virtual currencies, basically covering currency issuance, trading, derivatives investment, etc. Many people wonder, does it mean that virtual currency investment or trading activities are illegal?
In fact, the second point has a very key word "business". In other words, this provision is aimed at business activities related to virtual currency, not personal activities. Since it is a business activity, it is a commercial activity for profit by an individual or organization. This type of work is generally a planned and ongoing commercial operation. Personal activities are generally accidental and incidental and have nothing to do with business activities. Therefore, individuals holding, buying and selling virtual currencies will generally not be held legally responsible as long as it is not a systematic business behavior and has nothing to do with other related illegal and criminal activities.
3. At present, from a legal perspective, the consequences of illegal currency transactions themselves are at most invalid contracts, failed investments, and no legal protection.
Article 1, Paragraph 4 of the "Notice on Further Preventing and Dealing with Speculation Risks in Virtual Currency Transactions (Yinfa [2021] No. 237)" (hereinafter referred to as the "924 Notice"): There are legal risks involved in participating in virtual currency investment and trading activities. If any legal person, unincorporated organization, or natural person invests in virtual currencies and related derivatives that violates public order and good customs, the relevant civil legal actions will be invalid, and the resulting losses shall be borne by them themselves;
A very important role of the "924 Notice" is to explain what "public order and good customs" are. Although there is a lot of controversy whether discussing the issue of "public order and good customs" at the level of a normative document is in line with the spirit of the "Legislation Law". However, now that the judicial authorities have found this provision a treasure, it has been widely applied and seems to have become an unstoppable trend. After all, in the early years, some courts directly cited the "94 Announcement" to declare that any contract for the purchase and sale of virtual currencies is invalid. However, it is obviously against the provisions of the Civil Code. After all, the Civil Code clearly states that the circumstances in which a contract is invalid must be the circumstances written in my Civil Code, and nothing else will count. The two situations that have to be mentioned here are:
1. Paragraph 1 of Article 153 of the Civil Code stipulates: “Civil legal acts that violate the mandatory provisions of laws and administrative regulations are invalid.” Therefore, it is obviously illegal to use the "94 Announcement and 924 Notice" as the reason to determine that the virtual currency sales contract is invalid. Because the "94 Announcement and 924 Notice" are not mandatory provisions of laws and administrative regulations;
2. Paragraph 2 of Article 153 of the Civil Code stipulates that civil legal acts that violate public order and good customs are invalid. In academic terms, it is simply called "contrary to customs and invalid".
Therefore, since the "924 Notice" was promulgated in 2021, there have been many disputes over the purchase and sale of virtual currencies, such as those who paid but were not given coins; 0; those who have entrusted someone to sell the coins but not repaid them; those who make money by speculating on their behalf without distinction, or even those who do not issue project tokens when raising coins through ICOs, and other disputes, the court can cite the first article of the "924 Notice" all at once. Paragraph 4: If any legal person, unincorporated organization, or natural person invests in virtual currencies and related derivatives that violates public order and good customs, the relevant civil legal actions will be invalid, and the resulting losses shall be borne by them themselves;
To sum up: having said so much, in essence, from the perspective of the "laws" enacted by the National People's Congress, neither the "Civil Code" nor the "Criminal Code" specifically discusses whether virtual currency trading itself is illegal. Civil law, or criminal offences. At most, the virtual currency transaction may apply the terms of public order and good customs, and the contract will ultimately be ruled invalid. As a result, users who invest in virtual currencies are not protected by law.
However, it has to be said: If the Civil Code does not blindly protect the buying and selling of virtual currency itself, it will lead to the emergence of many "currency laols" in society who deliberately borrow money and fail to repay it, and entrusted currency speculation to make money. This has led to many phenomena that violate social fairness and justice with bad intentions and unwarranted gains. This is what the courts are not willing to see. Therefore, even after the "924 Notice", not all courts believe that the virtual currency investment contract is invalid. In addition, even if the virtual currency contract is deemed invalid, then it is not It is determined that "the contract is invalid and the plaintiff's claim is dismissed." Instead, the contract is invalid. You and the defendant should still pay back the plaintiff's coins.
Therefore, under the current legal framework, the mere act of holding, buying and selling virtual currencies by an individual does not in itself constitute a criminal offence.
