Cross-Border Payment Channels and Virtual Money Withdrawals: A Legal Perspective Discussion

Introduction to Cross-Border Payment Channels

Recently, the "Cross-Border Payment Link" business between the mainland and Hong Kong officially started operations. This service enables instant receipt of small remittances between residents of the two regions, greatly simplifying the cumbersome process of traditional cross-border remittances. Users only need to enter the recipient's bank account number or mobile phone number through a mobile application to complete the operation, providing great convenience for residents of both regions.

However, with the launch of this service, a question arises: Can the funds obtained from the legal sale of virtual money in Hong Kong be transferred back to mainland accounts using cross-border payment channels?

The Operation Mechanism of Cross-Border Payment Channels

The Cross-Border Payment Channel is the product of the integration between the mainland "Online Payment Interbank Clearing System" and Hong Kong's "Faster Payment System", subject to the legal regulations and financial supervision of both regions. This service is primarily aimed at individual users, requiring that northbound remittances (from Hong Kong to the mainland) must be initiated by a Hong Kong identity entity, while southbound remittances (from the mainland to Hong Kong) must be initiated by a mainland identity entity.

In terms of limits, Hong Kong residents have a daily remittance limit of 10,000 Hong Kong dollars to the mainland, and an annual limit of 200,000 Hong Kong dollars. Mainland residents sending money to Hong Kong follow an annual foreign exchange facilitation limit of 50,000 US dollars.

Currently, several major banks in mainland China and Hong Kong have launched this service. It is worth noting that this service is currently in a free phase and may expand to various application scenarios in the future, including individual-to-business, business-to-individual, and even government-to-business interactions, at which point a charging mechanism may be introduced.

Analysis of Hong Kong Virtual Money Withdrawal Models

In Hong Kong, there are mainly three ways to withdraw Virtual Money.

1. Offline OTC stores: You can directly exchange mainstream Virtual Money for Hong Kong dollars, but transfers are limited to local bank accounts in Hong Kong.

2. Licensed Exchanges: Such as some well-known trading platforms, but it is difficult for mainland residents to open accounts without a Hong Kong work visa or proof of actual residence.

3. Securities Companies: Some securities companies offer Virtual Money trading services, but similarly impose restrictions on pure mainland residents.

For mainland residents without a Hong Kong work visa or residence proof, the options for legally withdrawing money in Hong Kong seem limited to OTC shops.

Legal Risks of Using Cross-Border Payment Channels for Withdrawal

Although the cross-border payment gateway facilitates the cross-border transfer of funds, using it for Virtual Money withdrawals may involve legal risks.

First of all, the northbound transfer requirements of the cross-border payment platform must be that Hong Kong residents transfer to mainland residents. Even if mainland residents have Hong Kong bank cards, it is difficult to transfer to mainland bank cards through the "Faster Payment System".

Secondly, even if funds are transferred through local people in Hong Kong, there may still be compliance issues. The original intention of the cross-border payment system is mainly for specific scenarios such as tuition payments for studying abroad, utility payments, medical treatment, salary and subsidy disbursement. Participating institutions are required to comply with regulations related to cross-border fund settlement, fulfill anti-money laundering and other compliance requirements, and establish a risk monitoring mechanism.

Although the cross-border payment business is not currently subject to strict review of business background information, from a compliance perspective, it is not recommended to use this business for the outflow of Virtual Money and the entry of funds.

Conclusion

Recently, a securities company obtained a license for virtual asset trading services in Hong Kong, which has sparked a strong reaction in the market. This move indicates that traditional financial institutions are gradually entering the virtual money field, reflecting a new trend in the financial market. However, for individual users, it is still necessary to carefully consider the related legal and compliance risks when using emerging financial services.