The Impact of the New Forex Management Policy on Virtual Money Trading

Recently, the State Administration of Foreign Exchange released two important documents: "Administrative Measures for the Reporting of Foreign Exchange Risk Transactions by Banks (Trial)" and "Regulations on the Exemption from Due Diligence for Foreign Exchange Business by Banks (Trial)". These documents have attracted widespread attention. The purpose of these two documents is to improve the regulatory system for bank foreign exchange business, enhance market transparency, and maintain order in the foreign exchange market. In the context of big data and information technology, how will these new policies affect Virtual Money traders?

Main Content of the New Policy

1. The "Measures for the Administration of Foreign Exchange Risk Trading Reports (Trial)" require banks to monitor and report potential foreign exchange risk trading activities, effectively installing a "monitor" for the foreign exchange market to promptly identify and curb illegal activities.

2. The "Bank Foreign Exchange Business Due Diligence Exemption Regulations (Trial)" clarifies the situations and conditions under which banks are exempt from due diligence in foreign exchange business, providing clear compliance guidance for banks.

Impact on Virtual Money Trading

Strengthening of regulatory measures

1. Full-chain monitoring: The forex administration will be able to comprehensively grasp the entire process of Virtual Money transactions, including purchasing, trading, and withdrawing.

2. Bank Reporting Mechanism: Banks must promptly report suspicious transactions to the foreign exchange administration and provide risk warnings to customers.

3. The State Administration of Foreign Exchange's criteria for judgment: Although the specific standards have not been fully disclosed, the administration will make judgments based on multiple factors such as transaction amount and the legality of the source of funds.

The deeper logic of the new policy

The State Administration of Foreign Exchange simultaneously issued regulatory documents and exemption regulations, on one hand strengthening the monitoring of virtual money transactions, and on the other hand providing compliance guidance for banks to ensure a smooth transition of regulatory measures.

Definition of the Nature of Trading Behavior

1. Legal behavior:

   • For individuals, transactions with legally sourced funds that comply with the individual's annual forex facilitation limit generally do not involve serious legal risks.
   • For enterprises or institutions, transactions with legitimate sources of funds, real cross-border capital flows, and compliance with forex management regulations generally will not be subject to intervention.

2. High-risk behavior:

   • Transactions involving money laundering, terrorist financing, and capital flight crimes.
   • Illegal activities such as evading forex and fraudulent foreign exchange purchases.
   • The bank failed to timely detect and report suspicious transactions.

Case Analysis

Zhang Mouqun, Wu Mourui and others illegally operated, defrauded export tax rebates and issued false value-added tax special invoices case.

The case involves multiple charges including illegal operation, fraudulently obtaining export tax refunds, and issuing false value-added tax special invoices. The trial strongly emphasized clarifying the flow of funds and the amount of illegal forex transactions, using evidence such as bank statements and chat records to accurately determine the amount of illegal operations. The court ultimately imposed severe sentences on several defendants.

Future Outlook

With the continuous development of financial regulatory technology, the regulation of Virtual Money trading will become stricter and more refined. Coordination and consensus among various departments will still require time, but the regulatory trend has become clear.

Conclusion

Although virtual money trading brings innovation and convenience, it also comes with legal risks. Ordinary consumers generally will not face legal risks as long as they comply with relevant regulations and maintain the legality of the source of funds. Enterprises and institutions, especially those involved in cross-border transactions, need to pay extra attention to compliance. In the future, as regulatory consensus is formed, the regulation of virtual money will become more transparent and efficient to ensure the stability and order of the financial market.