The global cryptocurrency market continues to evolve, with major digital assets like Bitcoin (BTC), Ethereum (ETH), Litecoin (LTC), and Tether (USDT) capturing widespread attention. Among them, Bitcoin has seen particularly dramatic growth—on December 5, 2024, its price surged past $98,000 per coin on certain exchanges. While the market momentum is strong, regulatory approaches vary significantly across jurisdictions.
This article explores whether mainland Chinese residents can legally engage in cryptocurrency trading by leveraging Hong Kong’s relatively open regulatory framework. We’ll examine the legal landscape in both mainland China and Hong Kong, analyze access restrictions, and clarify common misconceptions.
Cryptocurrency Regulation in Mainland China
Mainland China maintains a strict stance against cryptocurrency-related financial activities. The regulatory journey began in 2013 when the People’s Bank of China (PBOC), alongside five other ministries, issued the Notice on Preventing Bitcoin Risks (Yinfa [2013] No. 289). This document established that:
“Bitcoin does not have the attributes of legal tender or compulsory currency status and is not truly a currency. It cannot and should not be used as a medium of exchange in the market.”
Financial institutions and payment companies were prohibited from offering services related to Bitcoin transactions.
In 2017, seven regulatory bodies, including the PBOC, released the Announcement on Preventing Risks of Token Issuance Financing, which labeled initial coin offerings (ICOs) as illegal fundraising activities. The announcement banned all token issuance and required existing projects to halt operations and refund investors. As a result, major domestic platforms like "Bitcoin China" shut down.
The most comprehensive policy came in 2021 with the Notice on Further Preventing and Responding to Risks of Cryptocurrency Trading and Speculation (Yinfa [2021] No. 237), jointly issued by ten agencies, including the Supreme People's Court and the Ministry of Public Security. It explicitly declared that:
- All cryptocurrency-related business activities—including exchange, trading, brokerage, derivatives, and token issuance—are prohibited.
- Overseas exchanges providing services to mainland residents via the internet are engaging in illegal financial activities.
- Civil legal acts involving cryptocurrency investments carry significant legal uncertainty, and losses incurred are borne solely by individuals.
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While holding cryptocurrency itself is not inherently illegal—recognized by recent commentary from the Shanghai Higher People’s Court as having property value—any form of transaction or speculative activity remains legally risky under current regulations.
Is Cryptocurrency Trading Legal in Hong Kong?
Hong Kong has taken a progressive and regulated approach toward virtual assets. In 2022, the Financial Services and Treasury Bureau released the Hong Kong Virtual Asset Development Policy Statement, affirming support for responsible innovation in the sector.
A major milestone occurred on June 1, 2023, when the Securities and Futures Commission (SFC) implemented the Guideline for Virtual Asset Trading Platform Operators and updated anti-money laundering rules. This marked the formal launch of the Virtual Asset Service Provider (VASP) licensing regime.
By August 2023, licensed platforms were permitted to offer retail investors access to cryptocurrency trading—making Hong Kong one of the few major financial hubs to allow this under full regulatory oversight.
Currently, there are three licensed virtual asset trading platforms operating in Hong Kong:
- OSL Exchange
- HashKey Exchange
- HKVAX (Hong Kong Virtual Asset Exchange Limited)
These platforms are subject to stringent supervision by the SFC and the Hong Kong Monetary Authority (HKMA), ensuring investor protection, transparency, and compliance with AML/CFT standards.
Beyond centralized exchanges, there are three primary ways to trade crypto in Hong Kong:
1. Licensed Cryptocurrency Exchanges
Trading through regulated platforms ensures compliance with capital requirements, custody rules, cybersecurity standards, and disclosure obligations.
2. Brokerage-Based Trading
Some licensed securities firms, such as Victory Securities and Tiger Brokers, allow clients to buy and sell crypto products through specialized accounts. However, access is not automatic for mainland residents.
3. Over-the-Counter (OTC) Transactions
Cash-based OTC trades via physical outlets or ATMs exist but remain largely unregulated. In February 2024, the Hong Kong government published a consultation paper aiming to bring OTC transactions under regulatory supervision due to rising concerns over money laundering risks.
Can Mainland Residents Trade Crypto in Hong Kong?
Despite Hong Kong’s liberalized framework, mainland residents cannot legally participate in its regulated crypto markets.
While Hong Kong operates under a separate legal jurisdiction, mainland authorities retain extraterritorial jurisdiction in cases involving Chinese citizens or where harm occurs within mainland territory. Therefore, even if a mainland resident travels to Hong Kong to trade crypto, they may still face legal consequences upon return.
Several online sources claim that mainlanders can open accounts with Hong Kong brokers like Victory Securities for crypto trading. However, an inspection of Victory Securities’ official website reveals that while mainland residents may open securities accounts, they are explicitly excluded from opening Virtual Asset (VA) accounts—which are required for crypto trading.
Moreover, the SFC and HKMA’s Joint Circular on Virtual Asset-Related Activities by Intermediaries (December 2023) states in point 11:
“Whether virtual asset products can be sold to retail investors depends on the restrictions imposed by individual jurisdictions, exchanges, or products.”
It specifically identifies mainland China as a jurisdiction where the sale of virtual asset products to local investors is restricted or prohibited.
This means:
- Licensed Hong Kong platforms cannot onboard mainland residents.
- Providing crypto brokerage services to mainland clients—even remotely—is considered an illegal financial activity.
- Using offshore accounts or intermediaries does not eliminate legal risk under mainland law.
What About Using a Hong Kong Resident as an Intermediary?
Some consider asking Hong Kong-based friends or family members to trade on their behalf. Under mainland regulations, occasional personal assistance between relatives—without profit motive—may not constitute a criminal offense, provided no large-scale transactions or illicit funds are involved.
However, if such activity becomes systematic or commercial, it falls squarely under the definition of “illegal financial activity.” Those profiting from facilitating crypto trades for mainland residents could face criminal liability for illegal business operations or money laundering.
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Frequently Asked Questions (FAQ)
Q: Is owning cryptocurrency illegal in mainland China?
A: No. Simply holding cryptocurrency is not illegal. Courts have acknowledged its property value. However, trading, exchanging, or using it as payment carries legal risks.
Q: Can I travel to Hong Kong and trade crypto there as a tourist?
A: Technically possible, but highly risky. Most licensed platforms block mainland ID verification. Even if access is gained, repatriating funds may trigger scrutiny under capital controls and anti-money laundering laws.
Q: Are Hong Kong crypto exchanges accessible from mainland China?
A: Accessing these platforms from within mainland China via websites or apps likely violates the ban on overseas exchanges serving domestic users.
Q: Does having a Hong Kong bank account enable crypto trading?
A: Not necessarily. Banking access doesn’t override platform-level restrictions based on nationality or residency.
Q: Could future policies change this situation?
A: While Hong Kong aims to become a Web3 hub, alignment with mainland financial stability goals remains critical. Any expansion to mainland users would require explicit cross-border regulatory approval—which currently does not exist.
Q: What happens if I lose money trading crypto via unofficial channels?
A: Losses from unauthorized transactions are not protected by law. Civil claims may be dismissed as arising from illegal activities.
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Conclusion
While Hong Kong has established a robust and forward-thinking regulatory framework for cryptocurrency trading, it does not extend access to mainland Chinese residents. Regulatory barriers on both sides of the border make cross-jurisdictional participation legally perilous.
Mainland individuals should exercise extreme caution regarding online claims promoting “easy access” to Hong Kong crypto markets. The risks—including account freezing, fund loss, and potential criminal liability—far outweigh speculative gains.
For those seeking exposure to digital assets, exploring compliant alternatives within regulated international ecosystems remains the safest path forward—always prioritizing legal adherence over convenience.
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