Regarding the policy boundaries of domestic U merchants and the inflow and outflow of funds, there are clear regulations.

According to the current laws and regulations in mainland China, any activities involving the exchange, trading, and cross-border transfer of cryptocurrencies are not protected by law and pose significant compliance risks and potential threats to property safety.

Virtual currency trading is illegal: Under current policies, any form of virtual currency exchange, trading, or acting as a central counterparty to buy and sell virtual currencies is considered illegal financial activity.

Providing related services is prohibited: Providing information intermediary, pricing services, and exchange services for virtual currency transactions, known as "U merchants," as well as services such as fund transfers and settlement, are also prohibited.

Under a strict regulatory framework, any funds related to virtual currencies face extremely high risks:

Fund freezing: Financial institutions are obligated to monitor unusual transactions. Fund transfers associated with participation in virtual currency trading are easily identified as risky transactions, leading to account restrictions on non-counter transactions, limits, or even freezes.

Suspected criminal activities: Using virtual currencies for cross-border fund transfers may be classified as illegal foreign exchange trading, and in severe cases, individuals may bear criminal responsibility for crimes such as illegal business operations. There are already relevant judicial precedents.

Although the convenience of personal bank deposits and withdrawals and cross-border remittances has improved, the risk control of the financial system has not eased. Here are two key new regulations that will come into effect soon (effective January 1, 2026):

The rigid requirement that "cash deposits and withdrawals of over 50,000 yuan must register the source and purpose of funds" has been abolished.

Banks will adopt risk-oriented due diligence. This means that the process may be simplified for normal transactions, but for unusual transactions, banks will still verify the source and purpose of funds.

When processing cross-border remittances equivalent to or exceeding 1,000 USD, financial institutions must verify the core identity information of the remitter, such as name and account number.

This regulation is an anti-money laundering measure and does not change the annual foreign exchange purchase limit of 50,000 USD per person. The focus is to ensure that transaction information is genuine and accurate, preventing illegal cross-border flows of funds.

In summary, engaging in or participating in virtual currency activities such as “U merchants,” fund inflows, and outflows in the country carries clear legal and financial risks. Individuals should fully understand the relevant policies and avoid participating in such activities to protect their property safety.