Can Mainland Chinese Companies Legally Buy Bitcoin? A Legal Perspective

Global Corporate Adoption of Cryptocurrencies

The corporate world is increasingly embracing cryptocurrencies, with some companies making massive investments:

• MicroStrategy: Holds 174,530 BTC (worth ~$9.1 billion as of Feb 2024)
• Tesla: Maintains $500M+ in Bitcoin reserves and accepts crypto payments

• Boyaa Interactive (HKEX-listed): Approved $100M cryptocurrency purchases, currently holding:

  • 1,110 BTC (@ $41,790 avg)
  • 14,855 ETH (@ $2,777 avg)
  • 8M USDT
  • Reported $45.8M unrealized gains (March 2024)

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Legal Landscape for Chinese Companies

Regulatory Timeline

1. 2013: PBOC's Bitcoin Risk Notice recognized BTC as "virtual commodity"
2. 2017: ICO ban via 7-ministry joint announcement
3. 2021: 10-agency notice prohibited all crypto-related financial activities

Key Restrictions

• ❌ Crypto-to-fiat exchanges
• ❌ Trading platforms serving Chinese users
• ❌ ICOs and token fundraising
• ❌ Derivative products

However, private ownership isn't prohibited under Article 127 of China's Civil Code.

Corporate Crypto Risks

1. Financial Policy Violations

The 2021 "924 Notice" classifies these as illegal:

• Exchange services between currencies
• Market-making activities
• Information intermediaries
• Derivatives trading

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2. Investment Uncertainties

• Courts may void contracts violating "public order"
• Recovery of funds isn't guaranteed
• No uniform judicial standards nationally

3. Operational Challenges

• Accounting: Treated as intangible assets with impairment risks
• Taxation: No clear framework for crypto transactions
• Payroll: Crypto salary payments often invalidated

Case Studies

• Meitu (HKEX): Books crypto as indefinite-life intangible assets
• US Firms: Classify stablecoins as financial instruments, others as intangibles

FAQ

Q: Can Chinese companies hold Bitcoin?
A: While not explicitly banned, all trading/exchange services are prohibited. Ownership carries significant legal risks.

Q: What happens if a company receives tainted crypto?
A: Corporate accounts may be frozen during AML investigations, causing operational disruptions.

Q: How do listed companies account for crypto?
A: Most treat them as intangible assets with value impairment protocols (e.g., MicroStrategy, Tesla).

Q: Are crypto salaries legal?
A: Chinese courts typically invalidate such arrangements (see Case No.: (2022)京03民终12380号).

Compliance Recommendations

1. Conduct thorough due diligence on:

   • Transaction counterparts
   • Fund sources
   • Exchange platforms
2. Implement risk isolation measures

3. Consult legal experts for:

   • Treasury management
   • Tax planning
   • Dispute resolution

Note: This analysis reflects policies as of 2024. Always verify with current regulations.