Legal Risks and Practical Operations of Crypto Assets Exchange

Recently, many people have inquired about the legal risks and specific operational methods for exchanging Crypto Assets (especially USDT). This article will briefly analyze the legal risks and feasibility of some current exchange channels to help everyone use and dispose of Crypto Assets legally and compliantly.

It should be noted that this article is intended for ordinary users whose sources of funds are legal, and who purchase and hold Crypto Assets solely for personal daily consumption and normal investment activities. All methods mentioned in the article are derived from information obtained during the process of providing legal services to clients, and there is no conflict of interest; the relevant opinions are for reference only.

1. Hong Kong licensed Crypto Assets exchange + brokerage channel exchange

Currently, the Hong Kong Securities and Futures Commission has approved 7 licensed Crypto Assets exchanges (or operators), and recently issued 4 licenses at once, demonstrating the thriving development of Crypto Assets in Hong Kong.

According to practical experience, exchanging through Hong Kong channels is a relatively legal and compliant method with lower legal risks. However, it should be noted that currently, USDT and other Crypto Assets cannot be traded directly on licensed exchanges and need to be facilitated through BTC/ETH spot channels.

Taking a licensed exchange as an example, behind it is a fully licensed brokerage that holds multiple financial service licenses, including licenses for Crypto Assets trading, consulting, and asset management services. Users can exchange USDT for BTC or ETH or other fiat currencies through the platform, with short trading cycles that are basically unaffected by market financial risks. After the exchange is completed, the funds (HKD or USD) will be transferred to a bank account in Hong Kong.

The advantages of this method are good compliance, clear funding channels, a low possibility of receiving illegal funds, and almost no risk of account freezes. The downside is that residents of the mainland currently cannot directly open Crypto Assets trading accounts and may need assistance from overseas friends or relatives; additionally, it may require a personal visit to Hong Kong to open a bank account, which is relatively cumbersome for small exchanges.

2. Top Exchange OTC Exchange

This method has the lowest cost, and users can open accounts and operate independently. However, it should be noted that this has become one of the easiest channels to receive illegal funds. Once illegal funds are received, not only may the bank card be frozen and the funds become unusable, but there may also be legal penalties.

If you choose this method, it is recommended to carefully review the trading records and evaluations of the counterparty on the platform, select counterparties with a high reputation, and avoid those with poor trading credibility or abnormal trading records.

3. U Card Exchange

The overall compliance of U cards is not a major issue; some U cards can even be linked to mainstream payment applications. However, U cards also carry risks. Currently, many cards available on the market are MasterCard or UnionPay U cards, which have relatively secure sources of funds. However, there are numerous card issuing agents, and it is essential to carefully choose reliable agents that have passed KYC. Some U card service providers do indeed have instances of suddenly stopping their services, which may result in funds becoming inaccessible.

4. Coin Exchange

The risks of trading with coin merchants are similar to those of OTC withdrawals from exchanges, as you may also receive funds of unknown origin, leading to account freezing or requests for testimony. There have even been extreme cases where individuals have been investigated as suspects due to multiple exchanges through coin merchants.

In general, the risk of exchanging coins with a currency dealer is relatively high. Do not easily trust so-called "frozen card guarantees" or "frozen card compensations" and other promotions. If you do not have a very reliable partner, it is advisable to avoid choosing this method.

5. Hong Kong Offline Exchange

This method usually requires an overseas (including Hong Kong) bank card. In Hong Kong, physical exchange points are divided into two types: ATMs and offline small shops. Generally, customers do not need to register their information for daily transaction amounts below 120,000 HKD; exceeding this amount requires simple KYC, with a fee of about 4%.

For users with legal sources of funds that are only used for personal consumption and investment, this is a cost-effective and convenient channel. However, there is still a risk of receiving illegal funds, so it is recommended to choose well-established and reputable stores for exchanges located in areas such as Mong Kok or Tsim Sha Tsui.

Conclusion

It is important to emphasize that there is currently no exchange solution that is absolutely secure and flawless. Even the several methods mentioned in this article still carry risks such as receiving illegal funds and high transaction costs. It is recommended that users carefully consider before deciding to exchange, to avoid making rash decisions.