Legal Risks and Operational Recommendations for Crypto Assets Exchange

Recently, many people have inquired about the legal risks associated with the exchange of Crypto Assets (especially USDT) and the practical methods for doing so. This article will briefly explore the legal risks and feasibility of some current exchange channels, aiming to help everyone use and dispose of Crypto Assets legally and compliantly.

It should be noted that this discussion is only for ordinary users whose sources of funds are legal and who purchase and hold Crypto Assets solely for personal daily consumption and normal investment activities.

1. Licensed Crypto Assets Exchange and Brokerage Channels in Hong Kong

Currently, the Hong Kong Securities and Futures Commission has authorized licenses for 7 crypto assets exchanges (or operational entities), showing the thriving trend of crypto assets in Hong Kong.

According to practical experience, exchanging USDT through Hong Kong channels is a relatively legal and compliant method with less legal risk. However, it should be noted that currently, USDT and other Crypto Assets cannot be traded directly on licensed exchanges and need to be operated through BTC/ETH spot channels for assistance.

Take a licensed exchange as an example, behind it is a fully licensed brokerage that holds multiple financial service licenses, including licenses for Crypto Assets trading, consulting, and asset management services. The platform can legally use the Hong Kong BTC/ETH spot channels to assist users in exchanging USDT for BTC, ETH, or other fiat currencies, with a short trading cycle that is basically unaffected by market financial risks.

The advantages of this method are good compliance, clear funding channels, low possibility of receiving illegal funds, and almost no risk of account freezes. The disadvantages are that currently, residents of the mainland cannot directly open a Crypto Assets trading account, which may require assistance from overseas friends and relatives; at the same time, it may be necessary to personally go to Hong Kong to open a bank account, which is relatively cumbersome for small exchanges.

2. Mainstream Exchange OTC Exchange

Selling through over-the-counter (OTC) methods from certain leading exchanges is the lowest cost option, and users can open accounts and operate on their own. However, it is important to note that this channel has now become one of the easiest ways to receive illegal funds. If funds of unknown origin are received, not only may bank cards be frozen and funds become unusable, but there may even be legal consequences.

If you choose this method, it is recommended to carefully review the trading records and evaluations of the trading counterpart's platform, select a counterparty with a high reputation, and stay away from parties with poor trading credibility or abnormal trading records.

3. Crypto Assets Credit Card

Regarding the compliance of Crypto Assets credit cards, overall the issues are not significant, and some cards can even be linked to mainstream payment applications.

However, Crypto Assets credit cards also carry risks. Currently, there are many Mastercard or UnionPay Crypto Assets credit cards on the market, and the source of funds is relatively secure. However, there are numerous card issuing agents, and one must choose a reliable provider that complies with the KYC process. Some service providers have indeed stopped their services suddenly; there have been reports from users that the Crypto Assets credit card service provider they used suddenly ceased providing services for users in mainland China, resulting in inaccessible funds and causing a lot of trouble.

4. Crypto Assets Trader

The risks of exchanging through crypto assets traders are similar to those of OTC withdrawals from exchanges, as they may also receive funds of unknown origin, leading to account freezes or being asked to provide testimony as a witness. There are even extreme cases where users have been investigated as suspects due to multiple currency exchanges through traders.

Overall, the risks for Crypto Assets traders are relatively high, and one should not easily believe in so-called "frozen card guarantees" or "frozen card compensations" and other promotions. If there are no very reliable and familiar partners, it is advisable to avoid choosing this method of exchange.

5. Hong Kong Offline Exchange

This method usually requires a bank card from overseas (including Hong Kong). Physical exchange points in Hong Kong are divided into two categories: ATMs and offline small shops. Generally, these small shops do not register customer information for daily transaction amounts below 120,000 HKD; transactions exceeding 120,000 HKD require simple identity verification, and the service fee usually fluctuates around 4%.

For ordinary users whose sources of funds are legitimate, and who purchase and hold Crypto Assets solely for personal daily consumption and normal investment activities, this is indeed a low-cost and convenient channel. However, there is also the risk of receiving illegal funds, and it is recommended to exchange at more stable, long-established stores in areas like Mong Kok or Tsim Sha Tsui to reduce risks.

Conclusion

It is important to emphasize that there is currently no "completely secure" or "flawless" Crypto Assets exchange solution. Even the few solutions mentioned in this article still carry risks such as receiving illegal funds and high transaction costs. It is recommended that everyone carefully consider their decisions before exchanging and not act rashly.