China is famous not only for innovative technologies, but also the most developed financial market in the world, therefore, the legal regulation of operations with cryptocurrencies in China is considered advanced.
Until recently, the Chinese economy and legislation were considered favorable for the development of business related to cryptocurrencies. It was in this state that the largest number of mining pools was located. The crypto-currency business in China came to an entirely new level every year.
At the beginning of January 2018, a document appeared on the Internet, in which the financial regulator points out that the country needs to stop mining the cryptocurrency in connection with the consumption of a huge amount of electricity and a massive increase in speculation by virtual currencies.
The rapid development of the digital money market in the Middle Kingdom provokes a change in the legislation regulating this sphere. Today, the regulator considers the goods as a cryptocurrency. Cryptocurrency exchanges are registered in the State Telecommunications Bureau.
The tax system is also not adapted to the market conditions, therefore, in accordance with the current Chinese law, the income tax, income tax, capital gains tax, value added tax are levied on operations with cryptocurrency.
HISTORY OF DEVELOPMENT AND FORMATION OF CRYPTOCURRENCY BUSINESS
In November 2013, the deputy head of the People’s Bank made a stunning statement that in the near future Bitcoin has no chance of becoming a currency of national importance. At the same time, anyone can conduct activities related to cryptocurrency transactions.
In early 2014, the People’s Bank published recommendations for banking institutions and payment systems, which urged all organizations to close accounts of the main Internet resources that work with Bitcoin. The president of the People’s Bank argues that the state bank does not intend to ban Bitcoin, but the crypto currency is equated to the assets, and not to the monetary unit.
Despite such a loud statement and the actual permission to work with digital currency, representatives of the People’s Bank criticized the largest Chinese bank and several payment systems for continuing operations with Bitcoin.
Under such pressure, the digital money market lost its positions. The ambiguous position of the regulator could drive the crypto-exchange into the shadow.
In 2016, the People’s Bank held a briefing, which stated its desire to create its own electronic money. The popular American edition of The New York Times published an article with real data on transactions in the network. Most of China’s electronic transactions related to digital money are carried out through major pools.
The rate of 70% is too high for a state that does not have an adequate legislative base. Specialists in this industry argue that in the near future virtual property will be recognized as the basic human right. Corresponding amendments are included in the new draft of the Civil Code of China.
Since 2013, the Chinese legislation has not been amended regarding the legal regulation of cryptocurrency transactions. The People’s Bank jointly with other market players worked out a draft of changes that included:
- mandatory registration of websites dealing with Bitcoin (exchange) in the Telecommunications Bureau;
- Bitcoin is equated exclusively with the goods, and not with the monetary unit;
- financial companies are prohibited from conducting activities related to cryptocurrency transactions.
China’s legislation does not provide for special rules for levying taxes on transactions involving digital money. When selling, buying and exchanging crypto currency by individuals and legal entities, taxation is carried out on general grounds.
To go through the procedure for regulating transactions with crypto-currencies in China, it is worthwhile to contact the professionals of Eternity Law International. Call to get advice.