The Legal Minefield of Crypto Trading Behind the Great Firewall: What You Need to Know

　　Recent reports of cryptocurrency traders facing administrative penalties for using VPNs to access overseas trading platforms have sent shockwaves through China's crypto community. This development raises critical questions about the legal implications of bypassing China's internet restrictions for cryptocurrency trading.

　　The legal basis for these penalties stems from two key regulations:

　　1. The Provisional Regulations on the Administration of International Networking of Computer Information Networks (1996, amended 1997)

　　2. The Law on Penalties for Administration of Public Security (2005)

　　Article 6 of the Provisional Regulations mandates that all international internet connections must use state-approved channels, while Article 14 outlines penalties for violations, including fines up to 15,000 RMB and confiscation of illegal gains.

　　However, the application of these regulations to cryptocurrency trading raises several legal and practical questions:

　　1. Legislative Intent vs. Modern Technology

　　The 1996 regulations were designed to protect international computer information exchange, not to regulate cryptocurrency trading. The use of VPN technology, while bypassing the Great Firewall, doesn't inherently threaten the integrity of China's international internet connections.

　　2. The Definition of "Channels"

　　The 1998 implementation rules clarify that "channels" refer to physical connections. VPNs, being virtual connections, may not fall under this definition, suggesting that the regulations may need updating to address modern internet technologies.

　　3. Proportionality of Penalties

　　The confiscation of all cryptocurrency trading profits as "illegal gains" may violate the principle of proportionality in administrative law. Trading profits are not directly caused by VPN usage but rather by market activities.

　　4. Legal Distinctions in Crypto Activities

　　The law differentiates between:

　　Personal cryptocurrency investment

　　Arbitrage trading

　　OTC (over-the-counter) operations

　　While financial activities involving virtual currencies are restricted, personal investment isn't explicitly prohibited.

　　5. Due Process Considerations

　　Administrative penalties must consider:

　　The severity of the violation

　　Whether it's a first-time offense

　　The actual harm caused

　　The possibility of corrective action

　　6. Broader Implications

　　An overly broad interpretation of these regulations could potentially affect various legitimate activities, including:

　　Cross-border e-commerce

　　International media work

　　Academic research

　　Global business operations

　　For individuals facing penalties, several defense strategies may be considered:

　　1. Challenging the direct causation between VPN use and trading profits

　　2. Arguing for the limited scope of "illegal gains"

　　3. Demonstrating the absence of actual harm

　　4. Highlighting the outdated nature of the regulations in the context of modern internet technologies

　　While the legal landscape remains complex, understanding these nuances can help individuals navigate the risks associated with cryptocurrency trading in China. As always, it's crucial to stay informed about regulatory developments and seek professional legal advice when necessary.

　　The ongoing evolution of China's internet regulations and cryptocurrency policies suggests that this area of law will continue to develop, potentially requiring more nuanced approaches to balance national security concerns with the realities of global digital finance.