Why is it not allowed to engage in virtual currency in China?
Illegal cryptocurrencies have already perfectly circumvented foreign exchange controls to a certain extent. If cryptocurrencies were legalized, it could even directly undermine the Golden Tax Phase IV.
If you sell a house in a first-tier city and get 5 million cash, you want to exchange this money for 700,000 USD to transfer abroad.
The bank has a 50,000 quota for foreign exchange purchases, and remittances also have a 50,000 quota, providing double insurance, which would take 14 years to complete the transfer.
If you use someone else's quota to exchange for cash in USD and physically exit the country, carrying more than 5,000 will be restricted.
If you use someone else's quota to transfer to your overseas card, if there are more than three people involved, you will be monitored. If you want to take RMB out of the country and then exchange it for foreign currency, an individual can carry no more than 20,000 at a time.
If you want to remit RMB abroad, sorry, you can’t remit a single cent. All the legal paths you can imagine have been blocked. Now, back to cryptocurrencies.
If there are no quota restrictions, it perfectly circumvents them. If there are quota restrictions, assuming a reference of 50,000 USD, then you can use someone else's quota. Fourteen people can help you exchange 5 million RMB, then store it on a USB drive and take it out of the country. As long as you don’t say anything, no one will know.
In summary: Cryptocurrencies are, in a sense, a general equivalent close to precious metals. They have properties similar to precious metals: decentralization, anonymous transactions, which leads to a state of complete loss of control for centralized national finances.
With the advancement of the times, precious metals gradually withdraw from circulation, mainly due to physical laws at play. Compared to fiat currencies, they are too inconvenient. However, cryptocurrencies are not constrained by physical laws and are almost as convenient as payment platforms like Alipay and PayPal.
Even if we put foreign exchange controls aside, if everyone truly used cryptocurrencies, Golden Tax Phase IV would become a joke. Who can stand it?
