Discussion on the Legal Risks and Operational Methods of Crypto Assets Exchange

Recently, some users have raised questions about the exchange of Crypto Assets (especially USDT), including legal risks, feasible channels, and specific operational methods. This article will briefly analyze the legal risks and feasibility of some current exchange channels, aiming to help users legally and compliantly use and dispose of their Crypto Assets.

It should be noted that this article is mainly 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.

1. Licensed Crypto Assets Exchange + 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 vigorous development of Crypto Assets in Hong Kong.

Based on practical experience, exchanging through Hong Kong channels is a relatively legal and compliant way with lower legal risks. However, it should be noted that currently, Crypto Assets such as USDT cannot be traded directly on licensed exchanges and require auxiliary operations through BTC/ETH spot channels.

Take 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 through the platform, and then convert it to fiat currency, with the final funds transferred to a bank account in Hong Kong.

The advantages of this method are good compliance, clear fund flow, and low risk of card freezing. The disadvantage is that currently, residents of the mainland cannot directly open a Crypto Assets trading account, which may require assistance from overseas friends and relatives; at the same time, it may require a personal visit to Hong Kong to handle related procedures, which is relatively cumbersome for small exchanges.

2. Top Exchange OTC Exchange

This method has a lower cost, and users can open accounts and operate by themselves. However, it should be noted that this has become one of the easiest channels to receive dirty money. If dirty money is received, not only may the bank card be frozen and funds become unusable, but there may also be judicial penalties.

If you choose this route, it is recommended to carefully check the trading records and reviews of the counterparty's platform, select a counterparty with a high reputation, and avoid those with poor trading credibility or abnormal trading records.

3. U Card Exchange for Money

The use of U cards is generally not a big problem for ordinary users, and some U cards can even be linked to mainstream payment applications. However, U cards also come with risks, mainly due to the numerous card issuing agents, so it is important to choose reliable agents who have passed KYC checks carefully. At the same time, some U card service providers may suddenly stop their services, leading to funds being inaccessible.

4. Coin Trader Exchange

The risks of exchanging coins with brokers are similar to the OTC withdrawal from exchanges, and there is also a possibility of receiving funds of unknown origin, which may lead to card freezing or investigation. There have even been extreme cases where individuals were investigated as suspects due to repeatedly exchanging coins with brokers.

Overall, the risks associated with coin dealer channels are relatively high, and it is not advisable to trust so-called "frozen card guarantees" or "frozen card compensations" advertisements. Unless there are very reliable partners, it is not recommended to choose this method.

5. Hong Kong Offline Coin Exchange

This method usually requires a bank card from abroad (including Hong Kong). The physical exchange points in Hong Kong are divided into two types: ATMs and offline small shops. Generally, transactions under HKD 120,000 per day do not require customer information registration; amounts exceeding this require a simple KYC process, with a fee of around 4%.

For users with legal sources of funds that are only used for personal consumption and investment, this is a low-cost and convenient channel. However, there is still a risk of receiving dirty money, and it is recommended to choose long-term established stores in areas such as Mong Kok or Tsim Sha Tsui for exchange.

Conclusion

Currently, there is no absolutely safe and perfect 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 think carefully before exchanging to avoid making hasty decisions.