First distinguish between customer background and place of business
"Chinese background" may mean that the shareholder is a Chinese enterprise, that the founder holds a Chinese passport, or that the customers mainly speak Chinese; it may also mean that operations, employees and funds all remain in the mainland. These situations cannot be conflated. A reasonable onboarding review should not treat nationality directly as a conclusion on the legality of the business; it should first answer: who signs the contract, who uses the service, where the business takes place, and which entity bears the payment or remuneration obligations.
Genuine overseas business still requires a local operating basis
Suppose an enterprise invested in by Chinese shareholders, which genuinely has overseas employees and warehousing, wishes to pay local suppliers: a locally licensed service provider should assess whether the product, currency, customer industry and payment purpose fall within the scope of its licence. For example, the EU's MiCA imposes onboarding requirements on entities providing crypto-asset services, and the relevant fiat-currency payments must also be separately checked for payment qualifications. What is discussed here is the scope for case-by-case assessment, not a compliance endorsement of all overseas enterprises.
What needs to be excluded is an overseas presence in name only while the business is actually domestic
The 2026 notice prohibits overseas entities from unlawfully providing virtual-currency services to mainland entities. If an overseas company is merely a shell set up to open accounts, and its real purpose is to buy coins for mainland enterprises, exchange for RMB, or circumvent foreign-exchange administration, the place of registration does not eliminate the risk. Another easily overlooked scenario is where a customer or group intends to issue tokens itself: without the lawful and compliant consent of the relevant authorities, domestic entities and the overseas entities they control may not issue virtual currency overseas, and ordinary payment use cannot be judged together with issuance business.
Onboarding materials must corroborate one another
It is advisable to cross-check registration materials against actual contracts, proof of office operations, payment obligations, sources of funds and beneficial ownership information. If a customer declares overseas operations, but orders, operating personnel and settlement receipts are all concentrated in the mainland, onboarding should be suspended and the inconsistency explained, rather than simply obtaining an overseas address declaration. Periodic review is equally important, because a customer may change its business or the regions it serves after account opening. The above are risk-review recommendations and cannot replace the customer-classification rules of a specific jurisdiction.
Recommended actions
- Record equity control, tax residence, place of business and place of service use separately, and do not merge them into a single "Chinese background" label.
- Require the customer to explain the commercial purpose of the stablecoin and cross-check it against orders and payment obligations.
- Trigger a dedicated legal review where factors of domestic equity interests, overseas issuance or mainland RMB settlement are present.
Information note: This article provides general information only and does not replace legal advice based on specific facts.
References
- Notice on Further Preventing and Addressing Risks Associated with Virtual Currency and Related Matters (Yin Fa [2026] No. 42) — People's Bank of China and seven other departments
- MiCA Article 59: Authorisation — European Parliament, Council of the European Union / ESMA official rulebook
- MiCA Article 70: Safekeeping of clients’ crypto-assets and funds — European Parliament, Council of the European Union / ESMA official rulebook
