Cryptocurrency is the digital currency that came into the attention of numerous investors in recent years. This is an important investment tool that can be on the list of international entrepreneurs in China, however, the legislation controlling the virtual currency is still on a debate. One of our company formation agents in China can give proper support for those interested in setting up a cryptocurrency company in China and can offer assistance in matters of formalities and documents. We also add that the WFOE in China or the Wholly Foreign-Owned Enterprise can be a suitable business form for international companies in China.
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Regulatory bodies for virtual money in China
China’s Ministry of Commerce proposed several blockchain solutions comprised by the five-year plan presented in 2016. The following regulatory bodies issued the “Notice on Preventing Bitcoin risks”, a document that comprises information about cryptocurrency and the possible financial risks and social uncertainty:
- The Securities Regulatory Commission of China.
- The Insurance Regulatory Commission in China.
- The People’s Bank of China.
- The Banking Regulatory Commission of China.
- The Ministry of Industry and Information Technology in China.
In order to reduce the financial risks which involve the cryptocurrency in China, the authorities do not treat the virtual money as a “currency”, outlining that the RMB will remain the official currency in China. For information about how to open a WFOE in China, feel free to talk to one of our consultants.
The use of blockchains and Bitcoin in China
The above-mentioned document states that Bitcoin cannot be used for prices on products and services for sale purposes, and therefore, it cannot be used as a financial tool. However, Bitcoin and other cryptocurrencies are not banned in China but are prohibited to be used as currency instead of RMB. It is important to know that cryptocurrency in China is treated as a “Virtual Commodity”, and therefore, treated as any kind of commodity recognized by Chinese legislation.
Since February 2019, the Cybersecurity Administration of China implemented the Blockchain Information Service Management Regulations, in order to establish the legal framework for blockchain-based businesses in China and the ways they can operate. For example, blockchain service providers in China must oversee all the activities and stop any illegal content or use. At the moment, there are more than 500 blockchain projects accepted by the Chinese government, several cryptocurrency exchange systems, and cryptocurrency wallet systems. The People’s Bank of China also approved these projects, mentioning that important state-owned banks and technology corporations are already involved.
In order to be able to set up a company in China, you will need a representative to deal with the required formalities. Thus, after the preparation of the documents, we proceed to open a bank account, the registration for the payment of taxes, the preparation of internal regulations, the preparation for obtaining a business license. We also remind you that the minimum share capital of CNY 30,000 is required for the most popular structure available.
The business model for cryptocurrency in China
Choosing the business model for opening a cryptocurrency in China is the first thing to consider. One can create his/her own blockchain platform or might be interested in re-selling bitcoins or any other virtual money. At the moment, there is no specific legislation for cryptocurrency businesses, but a company can run under the rules of a WFOE in China, the simplest business form that addresses to foreign investors. A cryptocurrency company business in China might take the time before it can be implemented, and that because the authorities continue to create the work for the proper regulatory framework.
Interested in a team of accountants in China? Our recommendation is to contact our specialists and benefit from the services offered. Among them, we mention payroll, bookkeeping, annual financial statements, audits, tax minimization methods, risk assessment, and evaluation. Also, investors with an extensive portfolio can opt for personalized financial consulting services to get an idea of the taxation in case of new investments.
Making investments in China
China is a huge investment recipient in Asia and a business destination where international entrepreneurs find excellent opportunities for generating profits in any kind of field. The manufacturing, the tourism and the financial sectors in China are among the important fields where large companies from abroad have branches, subsidiaries or representative companies with large profits. China offers the proper business climate which is sustained by an appealing tax system, a good infrastructure, and a stable economy. Below you can find facts and data about the investments and the economy in China:
- According to 2019 Doing Business report provided by the World Bank, China ranks 46th out of 190 economies;
- In just one year, China successfully improved the economy, being one of the top 10 countries that changed the economy direction;
- USD 1,627,719 million is the total FDI stock for China in 2018;
- China has the largest internal market, with more than 1.3 billion potential clients.
If you are interested in starting a business in China or register a company in China, you are invited to contact our team of company formation specialists in China.