Evolution of China's Cryptocurrency Policy
To answer "Is Binance legal in China?", we first need to understand the policy background of China's approach to cryptocurrency. China's regulatory stance toward cryptocurrency has gone through a process of gradual tightening.
In 2013, the People's Bank of China and five other ministries issued the "Notice on Preventing Bitcoin Risks," clarifying that Bitcoin is not legal tender but recognizing it as a virtual commodity that ordinary citizens can freely buy and sell. During this period, cryptocurrency trading in China existed in a relatively relaxed gray area.
In September 2017, the People's Bank of China and seven other departments jointly issued the "Announcement on Preventing Token Offering and Financing Risks" (known as the "September 4th Announcement"), comprehensively banning ICOs (Initial Coin Offerings) and requiring domestic cryptocurrency exchanges to cease operations. This directly led to multiple domestic exchanges (including Binance) relocating their operations overseas.
In September 2021, the People's Bank of China and ten other departments issued another "Notice on Further Preventing and Dealing with the Risks of Virtual Currency Trading Speculation," further clarifying that virtual currency-related business activities constitute illegal financial activities. This document was stronger in scope, characterizing the provision of cryptocurrency trading services as illegal and explicitly stating that overseas exchanges serving mainland Chinese residents also constitutes illegal financial activity.
Binance's Relationship with the Chinese Market
Binance was originally founded in China, and while founder Changpeng Zhao (CZ) is a Canadian citizen of Chinese descent, Binance's early team and user base were primarily Chinese. After the "September 4th" policy in 2017, Binance quickly relocated its operations overseas and stopped providing direct services to mainland China users.
Following the 2021 policy escalation, Binance further tightened its policies regarding mainland China users. Binance officially announced the retirement of mainland China user accounts, requiring registered mainland China users to complete asset transfers and account processing within a deadline. Binance's official website is also inaccessible directly from mainland China.
From Binance's official stance, it currently does not provide services to mainland China residents. New users selecting mainland China as their place of residence during registration will be informed they cannot register.
The Reality of Chinese Users Using Binance
Despite the policy restrictions, some Chinese users do continue to use Binance through various means. These include using VPNs to access the Binance website and app, registering with overseas phone numbers or email addresses, and completing KYC verification with overseas identity documents.
It must be clear that these practices carry legal risks. While China currently focuses regulatory enforcement primarily on exchange operators and individuals/enterprises providing related services, with no large-scale enforcement actions against ordinary individual users' trading activities so far, this doesn't mean individual users' actions are legal.
From the legal text perspective, the 2021 notice clearly states that "virtual currency-related business activities constitute illegal financial activities." While current enforcement against individual cryptocurrency holding and trading is limited, policy direction could change at any time.
Is Personally Holding Cryptocurrency Illegal?
This is the core question many people care about. Based on current policy understanding, personally holding Bitcoin and other virtual currencies does not in itself constitute a violation. The 2013 notice defined Bitcoin as a "virtual commodity," and individuals have the right to freely buy and sell. Subsequent policies primarily target "commercial" cryptocurrency activities, such as operating exchanges, providing trading services, and ICOs.
However, "holding is not illegal" and "trading is not illegal" are two different things. After domestic exchanges were shut down, the legality of trading through overseas exchanges exists in a gray area. Moreover, if transactions involve money laundering, pyramid schemes, fraud, or other criminal activities, even small amounts will face legal prosecution.
Additionally, OTC (over-the-counter) trading carries more prominent legal risks. If you receive "dirty money" from telecom fraud or other criminal activities in P2P transactions, your bank card may be frozen and you could even be drawn into a criminal case. This is the most direct and common legal risk Chinese users face when using cryptocurrency.
Risks of Using Binance
For Chinese users who continue to use Binance, the following risks should be clearly understood.
Account termination risk. Binance is obligated to comply with local laws and regulations. If the system detects you're a mainland China user (through IP address, identity information, etc.), your account may be restricted or closed. While enforcement intensity currently varies, this risk always exists.
Bank card freeze risk. When converting cryptocurrency to CNY through C2C trading, if the counterparty is involved in illegal activities, funds you receive may be flagged as "problematic," resulting in your bank card being frozen. The unfreezing process typically requires visiting a bank or public security office to explain the situation, potentially consuming significant time and effort.
Legal uncertainty risk. China's cryptocurrency regulatory policies are still evolving, and stricter regulations may emerge in the future. Actions that appear to be in a "gray area" now could become explicitly illegal later.
Tax risk. Whether cryptocurrency trading profits need to be taxed, and how, has no clear regulations in China currently. But as global cryptocurrency tax oversight strengthens, China may also introduce relevant tax policies in the future.
Users in Other Countries and Regions
It's worth adding that Binance operates legally in most countries and regions worldwide. Binance has obtained regulatory licenses in multiple countries. For ethnic Chinese users outside mainland China (such as those in Hong Kong, Taiwan, Singapore, Malaysia, etc.), using Binance typically doesn't involve the legal issues described above, though they must comply with local laws and regulations.
Hong Kong users should note that Hong Kong has its own regulatory framework for cryptocurrency trading, requiring exchanges to obtain licenses from the Securities and Futures Commission. Users should confirm that the platform they use complies with Hong Kong's regulatory requirements.
Summary
From a legal perspective, Binance's operation and services in mainland China are not permitted, and mainland China users using Binance face certain legal risks and uncertainties. While enforcement against ordinary individual users is currently limited, this doesn't equate to legality. Users need to assess risks independently, understand relevant policies, and make prudent decisions. This article provides informational reference only and does not constitute legal advice. For legal questions, please consult a professional attorney.