# Corporations to Gradually Receive Real-Name Accounts for Digital Assets: Legal Insights
The issuance of real-name accounts for corporate digital assets is set to be gradually permitted based on the type of corporation and nature of transactions. This move heralds the institutional framework allowing corporations to hold and dispose of digital assets under their real names, suggesting an active future for corporate digital asset holdings and transactions. Additionally, as corporate holdings of digital assets become more transparent, a crucial issue that must be considered in tandem is foreign exchange transactions.
When a corporation acquires digital assets through a corporate real-name account and confines transactions to domestic exchanges, foreign exchange regulations may not present significant issues. However, complications arise the moment these domestically held assets transition overseas.
Digital assets, despite being commonly referred to as cryptocurrencies, are not legally treated as currency or foreign exchange instruments. Thus, the trading, holding, or transferring of digital assets does not inherently constitute foreign exchange transactions that would require reporting. Nevertheless, complexities emerge when a corporation acquires digital assets through domestic exchanges under a corporate name and subsequently transfers them to foreign exchanges or wallets. If these assets are acquired abroad or used for payments to foreign clients, or if they are withdrawn from those exchanges in foreign currency, then reporting obligations related to foreign exchange transactions may arise.
Under foreign exchange transaction laws, any transactions involving the formation and movement of capital—such as acquiring foreign securities and bonds, dealing in overseas real estate, or trading derivatives—constitute ‘capital transactions’, necessitating prior reporting. However, since digital assets are not yet listed as a type of capital transaction under foreign exchange transaction laws, the acquisition of digital assets on foreign exchanges does not currently mandate prior reporting under these laws.
Nonetheless, caution is advised when digital assets transferred to foreign exchanges are used to purchase foreign securities, bonds, real estate, or derivatives. These transactions effectively use digital assets as a payment medium to acquire overseas assets, making them subject to capital transaction regulations. Consequently, the prior reporting requirement under foreign exchange transactions laws could be triggered. Especially when assets are transferred overseas solely for preparatory capital transactions, regulatory authorities may begin to interpret such movements as reportable transactions from that point. Corporations must note that the mere act of transferring digital assets overseas could hasten the reporting timeline.
Similarly, caution is required when using digital assets transferred to foreign exchanges or when directly sending domestically held or acquired digital assets to a foreign client’s wallet address as a payment method. Such actions are likely to be viewed as foreign payment transactions.
Although digital assets are not legally defined as ‘foreign currency,’ their effective role as a payment medium akin to foreign currency can bring them under foreign exchange regulation scrutiny. Particularly, transactions involving stablecoins or digital assets in amounts corresponding to legal tender may be regarded as foreign exchange transactions. Additionally, the use of unconventional payment methods could subject transactions to sanctions based on foreign exchange transaction laws.
If a corporation sells digital assets under its name on a foreign exchange and withdraws legal tender such as dollars or euros to a corporate or third-party foreign currency account, this is effectively seen as a foreign exchange remittance. Corporations must ensure they comply with reporting obligations under foreign exchange transaction laws related to international remittances.
To date, holding or trading digital assets domestically under a corporate name does not necessitate reporting as foreign exchange transactions. However, transferring these assets overseas, using them for payments, or converting them to foreign currency abroad yields similar effects to the movement of foreign exchange or capital transactions, thus potentially triggering reporting requirements under foreign exchange transaction laws.
As the government aims to amend foreign exchange transaction laws to introduce monitoring and reporting obligations for digital asset transactions abroad, it is crucial for corporations to establish internal review systems and documentation procedures. These systems should analyze and prepare for potential reporting obligations under foreign exchange transaction laws, especially focusing on the purpose of asset transfers, payment routes, and retrieval methods. With the regulatory landscape shifting from a gray area to a structured regime, pre-emptive measures are crucial in mitigating future risks.
