The Eight-Department Virtual Currency Circular: What Crime Can It Actually Make You Guilty Of?

The short answer

• The description of this as a document jointly issued by 13 departments is inaccurate. The document is the Notice on Further Preventing and Handling Risks Associated with Virtual Currency and Related Activities (关于进一步防范和处置虚拟货币等相关风险的通知), Yinfa [2026] No. 42, issued on 6 February 2026 by the People’s Bank of China and seven other departments, and it repealed the 2021 No. 237 document at the same time.
• It is neither a law nor an administrative regulation. It is a normative document made by State Council departments (with the State Council’s consent and by agreement with the Central Cyberspace Affairs Commission and the two supreme judicial organs), so it cannot create a criminal offence and cannot prescribe a sentence.
• But treating it as a mere sheet of paper is also a misjudgment: the Law of the PRC on Commercial Banks, the Regulations on Foreign Exchange Administration and the Regulations on Preventing and Handling Illegal Fund-Raising that it cites are all administrative regulations, and those are where penalties and criminal pursuit actually land.
• What it bans is business activity — exchange, market-making, price-matching, token issuance and trading in virtual-currency financial products. Occasional purchases and sales by an individual are not on the list, but civilly they may still be held invalid with the loss borne by the investor, and the account may still be restricted.
• Two new blocks are stablecoins and RWA: no stablecoin pegged to the renminbi may be issued offshore without consent; real-world asset (RWA) tokenisation onshore is prohibited in principle, except where approved and built on specified financial infrastructure.

1. Who issued the document, and what kind of document is it

The document is addressed to the provincial people’s governments; its basis is ten laws and administrative regulations, including the Law of the PRC on the People’s Bank of China, the Law of the PRC on Commercial Banks, the Regulations on Foreign Exchange Administration and the Regulations on Preventing and Handling Illegal Fund-Raising; and only eight departments are named on it.

The key is the opening sentence (quoted in part): by agreement with the Central Cyberspace Affairs Commission, the Supreme People’s Court and the Supreme People’s Procuratorate, and with the consent of the State Council. The two supreme judicial organs did not sign — they reached agreement. So the accurate description is issued by eight departments, not jointly issued by thirteen departments.

That distinction is not word-play. The signing parties determine the nature of the document: what eight State Council departments formulate together is a departmental normative document, not an administrative regulation and still less a law. Nor does agreement by the Supreme People’s Court and the Supreme People’s Procuratorate amount to issuing a judicial interpretation — a judicial interpretation addresses specific questions on the application of law in adjudication and prosecution work, is adopted after discussion by the adjudication committee or the procuratorial committee, has general judicial binding force, and takes the form of an interpretation, a provision or a reply. A departmental notice cannot go through that procedure.

2. It cannot convict you directly

Article 3 of the Criminal Law of the PRC (quoted): where an act is expressly provided by law to be a criminal act, it shall be convicted and punished in accordance with the law; where an act is not expressly provided by law to be a criminal act, it shall not be convicted and punished.

Article 96 of the Criminal Law (quoted) confines violating state regulations to: laws and decisions of the Standing Committee of the National People’s Congress, administrative regulations formulated by the State Council, administrative measures prescribed by it, and decisions and orders issued by it. Departmental rules and departmental notices are not within that list.

So the last article of the document shows its measure: item (18) says only that punishment shall be imposed in accordance with the relevant provisions and that, where a crime is constituted, criminal liability shall be pursued in accordance with the law — it does not say for how many years.

The real landing points are the regulations it cites plus the Criminal Law: illegally engaging in fund payment and settlement, or illegally trading foreign exchange, corresponds to Article 225, the crime of illegal business operations (up to five years; where the circumstances are especially serious, five years or more); absorbing public funds corresponds to Article 176, the crime of illegally absorbing public deposits (up to three years; where the amount is huge, three to ten years); unauthorised issuance corresponds to Article 179, the crime of unauthorised issuance of shares or of corporate or enterprise bonds (up to five years).

3. Which six activities are actually prohibited

Item (1) (quoted in part): conducting within China the business of exchanging legal tender for virtual currency, the business of exchanging one virtual currency for another, buying and selling virtual currency as a central counterparty, providing information intermediation and pricing services for virtual currency trading, token issuance and financing, and trading in virtual-currency-related financial products — such virtual-currency-related business activities, suspected of illegally issuing tokens or token coupons, unauthorised public issuance of securities, illegal operation of securities and futures business, illegal fund-raising and other illegal financial activities — are strictly prohibited in all cases and shall be resolutely banned in accordance with the law.

Two details are worth noting: the text uses suspected of, not determined to be, so the final characterisation still depends on the specific conduct and the evidence; and the object of the prohibition is business activity, with the emphasis on an operating character and on serving unspecified persons, not on holding.

The same item also says: no overseas entity or individual may, in any form, unlawfully provide virtual-currency-related services to entities in China. That cuts off the escape route of opening an account on an offshore exchange and using it through a VPN so that it supposedly stops being onshore activity.

4. The boundary: does an individual’s buying and selling of coins count as business

My summary, in three tiers from lowest to highest risk:

• Simply holding coins and keeping the private key yourself. The document does not prohibit holding, but it gives no protection either; if the coins are stolen, scammed away or taken, a civil claim is very hard to sustain.
• Occasional purchases, sales and transfers between individuals, not for profit and not directed at unspecified persons. These do not fall within the list of business activity, but they remain subject to the civil consequences in the next section, and funds tainted by crime will still be recovered.
• Repeated exchange, collecting and paying on others’ behalf, earning the spread, quoting prices and matching deals in chat groups, or running someone’s USDT through your account for a fee. This already has an operating character, is very likely to be found to be business activity, and is where illegal business operations, concealment of criminal proceeds and aiding information-network crime are most concentrated.

The test is not whether a company was registered, but whether the conduct is repeated, whether it is for profit, whether it is directed at unspecified persons, and whether it substantively provides exchange, pricing, price-matching or settlement services.

5. Civil consequences: the contract is invalid and the loss falls on the investor

Item (19) (quoted): where any entity or individual invests in virtual currency, real-world asset tokens and related financial products in violation of public order and good morals, the relevant civil juristic act is invalid and the resulting loss shall be borne by that party itself; where this is suspected of disrupting financial order or endangering financial security, the relevant departments shall investigate and deal with it in accordance with the law.

The corresponding basis is Article 153(2) of the Civil Code of the PRC (quoted): a civil juristic act that violates public order and good morals is invalid. The consequences of invalidity are dealt with under Article 157: property acquired shall be returned, or, where return is impossible, compensation shall be made at the property’s value; the party at fault shall compensate the other party’s loss, and where both parties are at fault each shall bear its corresponding responsibility.

In practice: courts often find contracts for entrusted wealth management, for buying and selling on another’s behalf, and for lending within the coin community invalid for violating public order and good morals; the agreed returns, interest and liquidated damages are generally not supported; whether the principal can be recovered depends on whether it can be shown that the other party actually received it and on how fault is apportioned.

6. Card restricted or frozen: where is the basis

Item (6) requires financial institutions (including non-bank payment institutions) not to provide account opening, fund transfer or clearing and settlement services for virtual-currency-related business activity; item (7) requires internet companies not to provide marketing and promotion or paid traffic referral, and the cyberspace, telecommunications and public security authorities may close the relevant websites, apps, mini-programs and public accounts in accordance with the law; item (8) prohibits the words virtual currency, stablecoin and RWA from appearing in company names and business scopes.

Two kinds of frozen must be told apart: one is a risk-control restriction imposed by a bank or payment institution (limits, deposits only with no withdrawals, non-counter services closed), based on account-management and anti-money-laundering duties, where you complain to the account-opening bank and supply source-of-funds materials; the other is a judicial freeze by a public security organ, a measure in criminal proceedings, where a lawyer must first establish the cause of action, the amount involved and the corresponding transaction records with the case-handling unit before applying for release. The two paths are not interchangeable.

7. Which offences may apply

The common ones are: the crime of illegal business operations (Article 225), the crime of illegally absorbing public deposits (Article 176), the crime of unauthorised issuance of shares or of corporate or enterprise bonds (Article 179), the crime of organising or leading pyramid selling (Article 224-1), the crime of money laundering (Article 191), the crime of aiding information-network criminal activity (Article 287-2), and fraud-type offences.

One point needs to be made clear: in coin-related cases the largest number of convictions is often not for buying and selling coins itself, but for the knowledge element in the fund chain — if the money received is the proceeds of fraud or gambling, the conduct is assessed as concealing or disguising criminal proceeds, or as aiding information-network crime. Characterisation turns on subjective knowledge and objective acts of assistance, not on which platform you traded on.

8. If you hold coins, or are running a related business

• Do not collect or pay on others’ behalf, and do not lend out bank cards or payment accounts. If one card is involved in a case, the accounts in your name are often restricted along with it.
• Keep chat records, orders, transfer receipts, the other party’s identity information and how the price was formed — this is the material that proves you did not know, and it cannot be reconstructed afterwards.
• If you receive tainted USDT or your account is frozen, first establish whether it is a risk-control restriction or a judicial freeze, then decide whether to complain or to instruct a lawyer; do not go and explain yourself and lock your account of events in place.
• Do not run exchange, price-matching, quoting or settlement for unspecified persons; do not register a company name or business scope containing the prohibited words.
• Before touching an RWA or stablecoin project, confirm whether it falls within the exception of being approved by the competent business department and built on specified financial infrastructure, and do not treat offshore issuance as a workaround.

9. Three limitations that should be stated

First, temporal effect. Document No. 42 took effect on 6 February 2026; conduct before that date is governed by the then-current No. 237 document, which took the same prohibitory position but differed in wording, and an individual case is judged under the rules in force at the time of the conduct.

Second, a court will not cite the notice directly as the basis of its judgment. Civil cases cite the Civil Code; criminal cases cite the Criminal Law and administrative regulations; the notice affects the findings indirectly, through public order and good morals and through violating state regulations.

Third, enforcement varies by locality. The approach to freezing cards, opening cases and finding business activity differs between regions; this article is a general explanation and does not amount to a conclusion on any specific case.

If you are facing a virtual-currency-related account freeze, contract dispute or criminal risk, you are welcome to contact Wang Xin: phone 186-0113-9509, WeChat wang223040.

This is an English edition of Wang Xin’s original Chinese article, 八部门那份虚拟货币《通知》，到底能给你定什么罪？. It explains the law of the People’s Republic of China in general terms and is not legal advice for any particular case; outcomes depend on the specific facts and on how local authorities apply the rules.