Bitcoin, as a decentralized blockchain-based cryptocurrency, is increasingly being used for real-world payment scenarios globally. But is Bitcoin payment legal in China? Here's a concise legal analysis.
Bitcoin Is Not a Legal Payment Instrument
Chinese law designates the Renminbi (RMB) as the sole legal tender, with irreplaceable status in payment systems.
Bitcoin as a Virtual Commodity
The 2013 Notice on Preventing Bitcoin Risks (issued by five regulatory bodies) states:
- Bitcoin lacks centralized issuance, has a capped supply, is borderless, and offers anonymity.
- While called a "currency," it lacks legal tender attributes (e.g., state issuance, mandatory acceptance).
- Classified as a specific virtual commodity, Bitcoin cannot circulate as currency.
👉 Understanding Bitcoin's legal status
RMB as the Sole Payment Tool
- Regulations on RMB Management mandate RMB acceptance for all domestic debts; bans alternative currency substitutes.
Financial institutions are prohibited from:
- Pricing services/products in Bitcoin.
- Trading Bitcoin or offering related financial services (e.g., insurance, custody).
Legal Risks of Using Bitcoin Payments
Though Bitcoin is a tradable asset, its use as payment carries significant legal risks:
1. Anti-Money Laundering (AML) Investigations
- China’s AML Law targets disguising illicit funds (e.g., drug trafficking, corruption).
Bitcoin’s pseudonymity and cross-border flow may trigger AML probes.
- Action Steps: If accounts are frozen, contact the bank, identify the investigating authority, and provide evidence for timely resolution.
2. Accounting and Tax Compliance Violations
- Company Law requires RMB-denominated accounting; Bitcoin’s valuation lacks standardized metrics.
Potential Violations:
- Arbitrary accounting method changes (Accounting Law: fines up to ÂĄ50,000).
- Tax evasion suspicions (Tax Collection Law: mandatory proper bookkeeping).
👉 Navigating crypto tax regulations
FAQs
Q: Can businesses accept Bitcoin payments in China?
A: No. RMB is the mandatory payment tool; Bitcoin transactions risk AML and accounting penalties.
Q: How are Bitcoin-related profits taxed?
A: Current laws lack clarity, but undeclared crypto income may face tax evasion scrutiny.
Q: What if my Bitcoin transaction triggers an investigation?
A: Cooperate with authorities, provide transaction records, and seek legal counsel to mitigate consequences.
Key Takeaways
- Bitcoin’s Status: Virtual commodity, not legal tender.
- Payment Risks: AML probes, accounting/tax non-compliance.
- Compliance: Use RMB for all transactions; avoid crypto-based financial services.