Cross-border Payment Channel: Convenient but Not Suitable for Virtual Money Transactions

Recently, the "Cross-border Payment Link" service between the mainland and Hong Kong has officially launched. This service allows residents of both regions to make instant small remittances without cumbersome bank procedures, simply through a mobile application. However, is this convenience applicable to the transfer of funds after Virtual Money transactions? This article will explore this issue.

Introduction to Cross-Border Payment

The Cross-Border Payment Gateway is a connection between the "Online Payment Interbank Clearing System" in Mainland China and the "Faster Payment System" in Hong Kong. It complies with the laws and regulations of both regions and financial supervision, mainly targeting individual users. Northbound remittances (from Hong Kong to Mainland) are limited to Hong Kong identity subjects, while southbound remittances (from Mainland to Hong Kong) are limited to Mainland identity subjects.

The daily remittance limit is 10,000 Hong Kong dollars, with an annual cap of 200,000 Hong Kong dollars. Mainland residents' remittances to Hong Kong are still subject to a foreign exchange facilitation limit of 50,000 USD per year. Currently, this service is free of charge, but it may expand to various application scenarios in the future, such as personal to business and business to personal.

Hong Kong Virtual Money Withdrawal Model

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

1. Offline OTC shops: You can directly exchange mainstream Virtual Money for HKD, but transfers cannot use mainland bank accounts.

2. Licensed exchanges: such as OSL, HashKey, etc., but pure mainland residents cannot open an account.

3. Securities companies: Such as Victory Securities, Guotai Junan International, etc., also do not accept pure mainland residents for account opening.

For mainland residents without a Hong Kong work visa or residency proof, OTC shops seem to be the only viable option for cashing out.

Legal Risks of Cross-Border Payment for Virtual Money Transactions

Although the cross-border payment platform facilitates fund transfers, there are legal risks associated with fund transfers after using it for Virtual Money transactions:

1. Identity restrictions: Northbound transfers require the transferor to be a Hong Kong resident. Mainland residents, even if they have a Hong Kong bank card, find it difficult to use the "Faster Payment System" to transfer to mainland bank cards.

2. Scope of Business Limitations: Cross-border payment services are mainly used for scenarios such as tuition payment for studying abroad, utility bill payments, medical treatment, and salary distribution.

3. Regulatory requirements: Participating institutions must comply with cross-border fund settlement management regulations, fulfill anti-money laundering and other compliance requirements, and establish a risk monitoring mechanism.

4. Remittance Purpose Review: Although cross-border payment services do not strictly review business backgrounds at present, from a compliance perspective, it is not recommended to use it for the transfer of funds related to Virtual Money transactions.

Conclusion

With the development of the virtual asset market in Hong Kong, traditional financial institutions have also begun to venture into this field. Recently, a securities company was granted approval to include virtual asset trading services within its securities trading license, sparking heated discussions in the market. This indicates that the boundaries between virtual money and traditional finance are gradually blurring, but compliance remains crucial. For individual investors, when conducting cross-border fund transfers, it is essential to carefully consider legal risks and ensure that operations are compliant.