Source: Rhythm Currency Circle
Recently, legal issues related to card freezes caused by the realization of USDT into RMB have become more and more frequent, and some currencies Players in the industry have begun to consider using MasterCard U cards to withdraw cash to avoid the problem of bank cards being frozen. However, although this method solves the problem of withdrawing money, it has caused new concerns: MasterCard U Card can be recharged with virtual currency and spent at domestic merchants. Is this model legal in China? What are the specific legal risks? This article will specifically analyze whether the relevant behavior is suspected of "illegal currency exchange" from three perspectives: "MasterCard U Card issuer, promoter in China, and user in China" Legal risks and provide some legal compliance advice to relevant persons.
Many people are curious: What is the specific model of using MasterCard U Card to open up domestic payment scenarios? In fact, the nature of the MasterCard U Card is similar to an overseas bank card that can be recharged with virtual currency and used domestically. This may be unfamiliar to everyone. Let’s give an example: MasterCard is equivalent to our domestic UnionPay. They are both Bank card organizations, but UnionPay is domestic and MasterCard is international; the issuer of "MasterCard U Card" is equivalent to a commercial bank under the UnionPay system, such as Agricultural Bank of China; and the "MasterCard U Card" launched by the issuer , which is equivalent to a "co-branded card" launched by the Agricultural Bank of China. Its feature is that it supports virtual currency storage. The MasterCard U Card supports the deposit of USDT, BTC, ETH and other cryptocurrencies, and can withdraw cash from all bank ATMs that support MasterCard. Then, the most amazing thing is: this MasterCard U card can complete consumer payments in China just like other international bank cards with VISA and MASTER payment functions. In other words: You can use U-Card as a payment tool by binding domestic mobile apps such as Alipay, WeChat, Meituan, and Ele.me. Just like Alipay selects a payment channel and a certain bank card, you can also select the payment method as "MasterCard U Card" when paying.
At this time, some people will have questions: If my U card is recharged with virtual currency, then I use the U card to complete the payment. Did the app platform such as Alipay receive the virtual currency? Or when I bought something in China, did the domestic merchants receive virtual coins? In fact, neither Alipay nor domestic merchants have received virtual coins. What they charge is still the legal currency of RMB. The logic is: U-card users recharge with virtual currency, and the card operator has already settled the virtual currency into foreign currency at its own stage. After that, users using the MasterCard U Card to make purchases in the country are the same as using ordinary bank cards with the MasterCard international payment function: due to the existence of formal international settlement agreements, domestic merchants actually receive RMB. This link does not involve virtual currency.
Previously published public accounts by our team In the article, we have analyzed in detail many laws and regulations related to illegal currency exchange and overseas jurisdiction. We believe that for MasterCard U Card issuers or issuer partner institutions (hereinafter referred to as "U Card issuers"):
Since most Countries other than China are not countries with foreign exchange controls. The "USDT and other virtual currencies-foreign currency" link of overseas U-card issuers basically does not constitute an illegal crime overseas. Therefore, considering the subsequent "foreign currency-RMB" This link is also endorsed by MasterCard’s international settlement agreement. Therefore, it seems difficult for the issuer to have legal risks in my country. However, it should be noted that our country's criminal law does not evaluate whether an act is a crime in separate sections, but as a whole. If these two acts are deemed by the case-handling agency to be a single act, there is a risk of being held criminally responsible. In the model of Chinese users using U cards: if the USDT that overseas Chinese users of U cards recharge into the U card is converted into RMB, then the issuer is equivalent to objectively realizing "using virtual currency as a medium to complete the exchange of RMB and "Exchange between foreign currencies", the case-handling agency may consider the previous legal behavior and the overall illegal currency exchange behavior to be related to the relationship between means and ends. At this time, virtual currency is equivalent to being used as a cover to circumvent my country's foreign exchange supervision. This model essentially violates the legal rights protected by the crime of illegal business operations and is a "disguised purchase and sale of foreign exchange."
In itself, for example, in Hong Kong, if you obtain a money exchange license from the customs and pay taxes legally in Hong Kong, there seems to be no legal problem. But if: There are a large number of mainland Chinese users who are looking for a "money exchange" to exchange U, and if the mainland users obtain U in exchange for RMB, there may be certain legal risks, that is, they may encounter mainland laws. of high-voltage lines.
After looking at the objective level, let’s look at the subjective level: In the link of “USDT and other virtual currencies-foreign currencies”, the U-card issuer has Is the fact that USDT is converted into RMB by Chinese users “knowingly”? If it is "knowingly", then the U-card issuer has the risk of triggering domestic foreign exchange control regulations, thereby constituting disguised buying and selling of foreign exchange, and constituting the illegal business crime of "illegal exchange of foreign exchange." As for how to determine this "knowledge", it is necessary to comprehensively consider multiple factors such as the extent of the issuer's participation in the U source, the specific circumstances of the case, and whether the fees charged by the issuer are reasonable.
If it can ultimately be proven that overseas U-card issuers are “knowingly aware” that the USDT recharged into U-cards by Chinese users is converted into RMB, then this is the realization of “using virtual currency as a medium.” ", complete the exchange between RMB and foreign currencies", which is equivalent to "disguised buying and selling of foreign exchange". According to Article 2 of the "Interpretations of the Supreme People's Court and the Supreme People's Procuratorate on Several Issues Applicable to Laws in Handling Criminal Cases of Illegal Engagement in Fund Payment and Settlement Business and Illegal Trading of Foreign Exchange" (hereinafter referred to as the "Interpretation"): "In violation of national regulations, the practice of buying and selling foreign exchange or disguised foreign exchange If the illegal trading of foreign exchange, such as buying and selling foreign exchange, disrupts the order of the financial market and the circumstances are serious, he shall be convicted and punished for the crime of illegal business operations in accordance with the provisions of Article 225, Paragraph 4 of the Criminal Law." Combined with the provisions of Article 3 of the Interpretation, To determine the circumstances, once the amount of illegal business operations exceeds 5 million yuan, or the amount of illegal income exceeds 100,000 yuan, it is considered a "serious circumstance." In other words, when the above-mentioned "serious circumstances" standard is met, the U-card issuer may become the principal offender of illegal business crimes.
However, there is a provision on jurisdiction that blocks the legal risks of these overseas companies in our country: due to the first level of illegal business crimes The sentence standard is "fixed-term imprisonment of less than five years or criminal detention", which does not meet the "minimum penalty of fixed-term imprisonment of more than three years", and does not apply to the protective jurisdiction of Article 8 of the "Criminal Law of the People's Republic of China": "Foreigners outside the territory of the People's Republic of China If the state or citizens of the People's Republic of my country commit a crime and the minimum penalty prescribed in this law is fixed-term imprisonment of more than three years, this law may be applied, except where the crime is not punishable according to the law of the place where the crime was committed."
So , according to the principle of "protective jurisdiction" in our country's criminal law, the U-card issuer's "USDT and other virtual currencies - foreign currencies" may not be held accountable under our criminal law system; however, our country's criminal law also has "personal jurisdiction" "/"Territory jurisdiction", this means that if a person with Chinese nationality engages in the U-card issuer's "USDT and other virtual currencies-foreign currency" activities, or engages in "USDT and other virtual currencies" within China, including territorial waters or airspace, Currency-Foreign Currency" activities can still be controlled by the "Criminal Law" in our territory.
Someone must have said that if the issuer is not a Chinese national and does not engage in "USDT and other virtual currency-foreign currency" activities in China, will Chinese law not be able to control it? From a law enforcement perspective, this is really the case. However, we believe that this is a bug in our current legislative system. Think about it: Is it possible that our country cannot control foreigners who defraud Chinese people through overseas phone calls because the statutory minimum sentence for some crimes is less than three years? Yet? Wouldn't this lead to a large outflow of ethnic funds, but our case handling units have nothing to do about it. Therefore, considering such a bug, I believe that the relevant departments will definitely issue relevant laws, regulations or judicial interpretations in the future to specifically punish this behavior. Regulation.
Since it is difficult to hold U-Card issuers accountable, will there be any legal risks arising from promoting MasterCard within the country?
We believe that if we really think about this issue, "disguised buying and selling of foreign exchange" constitutes an act of assistance that constitutes the crime of illegal business operations and cannot be escaped. For example, for the MasterCard U card launched by the issuer, the first step is to convert the depositor's U into US dollars, and then complete legal cross-border payment in accordance with MASTER's international payment agreement. This latter step is indeed legal and compliant, and there is no legal risk; however, in the previous step of "converting U into U.S. dollars", if a large amount of U is exchanged for RMB by Chinese users, then, starting from the "accomplice theory", giving U cards Those who are promoted by the issuer to these Chinese users are likely to be considered by the case-handling agency as "knowingly knowing and participating" in the behavior of "Chinese users exchanging RMB for U-U top-up and entering the MasterCard U-U Card operator to exchange for other foreign currencies", and the behavior is "knowing and participating" in China. The promoters are also part of the whole behavior, then this is the purpose of helping others indirectly realize the exchange of RMB and foreign currencies and buy and sell foreign exchange. Once the case-handling agency has evidence to prove that the promoter is subjectively aware of this situation, or should be aware of it, and the amount of business exceeds 5 million yuan, according to domestic laws, it will be "illegal trading of foreign exchange" and "illegal trading of foreign exchange". If the circumstances are serious, the promoter will be an accomplice to the crime of illegal business operations.
Of course, there are certain thresholds and risks for promoting and selling MasterCard U Cards within China. Compared with the legal risks of promoting MasterCard U Card in China, the question that most people may be more concerned about is: Will my personal behavior of simply using MasterCard U Card in China create legal risks? This situation is like: you find someone to exchange USDT into U.S. dollars, and then find someone to exchange the U.S. dollars into RMB and spend it within the country. Obviously, if we look at these processes together, we should not be able to escape being identified as "illegal currency exchange". However, illegal currency exchange is only for personal use and does not belong to business activities for profit. It is only an administrative violation. Behavior. Once the use of MasterCard U Card in the country is discovered, domestic users will face administrative fines.
Specifically, this is "illegal entry of funds". According to the provisions of Article 41, Paragraph 1, of my country's "Foreign Exchange Management Regulations": If foreign exchange is remitted into the country in violation of regulations, the foreign exchange management agency shall Order to make corrections and impose a fine of not more than 30% of the illegal amount; if the circumstances are serious, a fine of not less than 30% of the illegal amount but not more than the equivalent amount shall be imposed. For example: If Wang recharges USDT equivalent to 10,000 RMB worth of money into his MasterCard U-Card, and then uses this U-Card to spend 10,000 RMB domestically. Once this behavior is discovered, Wang will be fined less than 3,000 yuan. If it involves multiple illegal exchanges or huge amounts of exchange, the administrative agency may consider Wang to be a "serious case" and impose a fine of up to 3,000 yuan. A fine of more than 30% of the total amount will be imposed, but the fine will not exceed the amount of his illegal currency exchange itself.
Although, in view of the cross-border factors of the MasterCard U card model, the case handling agency is handling similar A cautious attitude is often adopted when handling cases, but U-card issuers, as well as domestic promoters and users, do have the risk of triggering relevant regulations on domestic foreign exchange management and being identified as "illegal foreign exchange." Therefore, lawyers hereby remind everyone: You must be cautious when promoting and using U-cards within the country. Once the relevant behavior is determined to be illegal or criminal by the case handling agency, be sure to contact a professional lawyer as soon as possible and let the lawyer provide targeted advice. Legal advice to resolve your own legal risks as soon as possible.
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