Discussion on the Legal Risks and Feasible Channels of Crypto Assets Exchange

Recently, many users have expressed concerns about the exchange issues of Crypto Assets (especially USDT) and hope to understand the related legal risks and feasible operational methods. This article will briefly analyze the legal risks and feasibility associated with some current exchange channels, aiming to help users legally and compliantly use and dispose of Crypto Assets.

It should be noted that this article is primarily aimed at ordinary users whose sources of funds are legal, and who purchase and hold Crypto Assets solely for personal daily consumption and normal investment activities. The methods described below are based on actual legal service experience, do not involve any interests, and are for reference only.

1. Licensed Crypto Asset Exchanges and Brokerage Channels in Hong Kong

Currently, the Hong Kong Securities and Futures Commission has approved 7 licensed Crypto Assets exchanges (or operating entities), demonstrating the thriving trend of Crypto Assets in Hong Kong.

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

For example, a licensed exchange is backed by a fully licensed brokerage that, in addition to its existing securities business license, has also obtained licenses for Crypto Assets trading, consulting, and asset management services. Users can exchange USDT for BTC or ETH through the platform, and then convert it into fiat currency, with funds ultimately transferred to a bank account in Hong Kong.

The advantage of this method is its higher compliance, clear funding channels, and lower risk of receiving illegal funds. However, there are also some limitations, such as the inability of residents from the mainland to directly open a Crypto Assets trading account, which may require assistance from overseas relatives and friends; additionally, this method may require a personal visit to Hong Kong to handle related procedures, which can be cumbersome for small exchanges.

2. Mainstream Exchanges OTC Channels

Some well-known exchanges offer over-the-counter (OTC) services, which are relatively low-cost and straightforward to operate. However, this is also one of the easiest channels to receive illegal funds at present. Once funds of unknown origin are received, it may not only lead to the freezing of bank cards but may also result in judicial penalties.

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

3. Crypto Assets Storage Card (U Card)

The use of U-cards is relatively safe among ordinary users, and some U-cards can even be linked to commonly used payment applications. However, U-cards also come with certain risks. The most common ones on the market are Mastercard or UnionPay U-cards, with relatively safe funding sources, but there are many card issuing agents, so it is important to carefully choose reliable service providers that comply with KYC processes.

It is worth noting that some U-card service providers may suddenly stop their services, causing funds to become inaccessible and inconveniencing users.

4. Coin Exchange

The risks of exchanging Crypto Assets through coin merchants are similar to those of OTC withdrawals from exchanges, as there is a possibility of receiving illicit funds, which may lead to account freezes or requests for assistance in investigations. In extreme cases, users who frequently use coin merchant exchange services have been regarded as suspects and subjected to investigations.

Overall, the risks of merchant channels are relatively high, and it is not advisable to easily trust so-called "frozen card guarantees" or "frozen card compensations". Unless there are very reliable partners, this method is not recommended.

5. Offline Exchange in Hong Kong

This method usually requires having a bank card from overseas (including Hong Kong). Physical exchange points in Hong Kong are mainly divided into two types: ATMs and offline small stores. Generally, customers do not need to register their information for daily transaction amounts below 120,000 HKD; amounts exceeding this require a simple KYC procedure. The handling fee typically fluctuates around 4%.

For ordinary users whose sources of funds are legal and used only for personal consumption and investment, this is a low-cost and convenient channel. However, there is still a risk of receiving illegal funds, so it is recommended to choose stores that have been operating stably for a long time in areas such as Mong Kok or Tsim Sha Tsui for exchanges to reduce risk.

Conclusion

It is important to emphasize that there is currently no completely safe and risk-free Crypto Assets exchange solution. Even the several methods mentioned in this article still carry risks such as receiving illegal funds and high transaction costs. Users are advised to carefully consider their options when choosing an exchange method, weighing the pros and cons to avoid making hasty decisions.