Why is virtual currency banned in China?
The core reason lies in its fundamental impact on the existing financial system, especially in terms of capital flow and tax regulation, which has almost 'disruptive' potential.
Imagine this: if one sells property in a first-tier city and cashes out 5 million, wishing to convert it to USD to transfer abroad, traditional financial channels have been strictly restricted. Banks have a limit of $50,000 each for currency purchases and remittances per year, and the entire process can take as long as 14 years. If one attempts to borrow someone else's limit or carry cash out of the country, there are clear restrictions and regulatory scrutiny on the amount. Directly transferring RMB abroad is basically impossible. All legal pathways are almost completely blocked.
The emergence of cryptocurrency has completely changed this game. Without limits, it can perfectly circumvent all controls. Even if referring to foreign exchange limits, it only requires a few people’s assistance to store a huge amount of assets on a USB drive, easily carried out of the country. The anonymity and decentralization of transactions make it similar to precious metals in the digital age, but far more portable than physical gold and silver, almost possessing the convenience of electronic payments.
This leads to two major uncontrollable risks: first, capital can flow freely across borders, making foreign exchange controls virtually ineffective. Second, all transactions can escape regulatory networks, and tax systems like the Golden Tax Phase IV will find it difficult to track capital flows, losing their ability to collect taxes. When a financial tool can bypass both foreign exchange and tax regulations, its legality is naturally difficult to accept.
Therefore, the ban is not merely based on technological prejudice, but on the fundamental maintenance of monetary sovereignty, financial stability, and national fiscal security. Before an effective regulatory framework is established, allowing cryptocurrency is tantamount to permitting a dual loss of capital and tax revenues. @俊子爱币
