Written by: Xiao Za Legal Team

Partners in the cryptocurrency circle generally believe that perpetual contracts are a type of virtual currency derivative, a financial product in the cryptocurrency area, which uses blockchain technology and is very similar in trading rules to traditional futures contracts.

The Xiao Jie team has noticed that with the price fluctuations of precious metals in 2026, and the ongoing energy crisis caused by geopolitical conflicts driving up oil prices, various exchanges are actively creating innovative products for cryptocurrency perpetual contracts that benchmark the prices of gold, silver, crude oil, etc., attracting a significant amount of capital for trading.

So, compared to traditional methods that benchmark BTC and ETH prices, is there a legal distinction for these innovative perpetual contracts? Are they closer to or further from the criminal red line? Today, the Xiao Jie team will discuss this issue in detail with everyone.

The reason for categorizing this case as a gambling operation lies in the belief of Chinese judicial authorities that trading in virtual currency perpetual contracts is, in the sense of criminal law, a gambling behavior.

What is gambling in the sense of criminal law? Article 303 of China's Criminal Law【Gambling Crime】 stipulates: "Anyone who organizes gambling for profit or engages in gambling as a business shall be sentenced to imprisonment of not more than three years, criminal detention or surveillance, and shall be fined." The Supreme People's Court, the Supreme People's Procuratorate, and the Ministry of Public Security have jointly or separately issued key judicial interpretations and normative documents, such as the "Interpretation on Several Issues Concerning the Application of Law in Handling Criminal Cases Related to Gambling" and the "Notice on Several Issues Concerning the Application of Law in Handling Illegal Gambling Cases," but they have not defined the concept of gambling itself, as if it were a self-evident concept that requires no explanation.

Only through guiding cases can we find a clearer answer to this question. In the Guiding Case No. 752 from the 84th collection of criminal trial references, the judge referenced the definition of "gambling" from the "Modern Chinese Dictionary," stating that gambling is using methods like card games or dice to place bets with money based on win or loss. The earliest gambling games emerged in China's Xia Dynasty 3,500 years ago—six bo. Since then, with social development, gambling forms have continued to innovate, and the variety has gradually increased, and the harms have also grown. New forms of gambling are no longer limited to using cards or dice as carriers; hence, considering this trend, we believe that any form that uses a certain medium for betting with money on win or loss constitutes gambling. The defendant's activity in this case used "六合彩" information for betting, placing stakes on win or loss, and was defined as gambling, consistent with the long-standing public understanding of the essence of gambling.

As can be seen, gambling behavior in the sense of China's criminal law is quite broad; as long as it can be categorized as substantially "betting big or small, gambling on win or loss," there is no obstacle to defining it as gambling.

Returning to the cryptocurrency perpetual contract context, cryptocurrency perpetual contracts are indeed very similar to the Supreme People's Court case guiding case No. 146 regarding the gambling operation case of Chen Qinghao, Chen Shujuan, and Zhao Yanhai. In this case, the mode of behavior of the suspects was relatively similar. The defendants were engaged in "binary options" trading, soliciting "investors" via the internet outside of legally designated trading places, using currency price movements as the trading object, and determining profits and losses based on "buying up" or "buying down"; investors who bought correctly gained benefits, while those who bought incorrectly lost their funds to the website (the house). The judge in this case believed that because the results of profits and losses for users in this trading model are not tied to the actual price fluctuations, but only whether the reference commodity price goes up or down, its essence still falls within the realm of "betting big or small, gambling on win or loss", and thus is a gambling behavior masquerading as options trading.

With the increase in cryptocurrency perpetual contract cases, there are some opinions in practice suggesting that cryptocurrency perpetual contracts should not be classified as gambling operations but rather as illegal business operations.

Scholars and legal practitioners holding this opinion mainly argue that the gambling behavior in China's "gambling crime" and "establishing gambling operations" definitions should be a purely "chance-based behavior," and must be similar to randomly rolling dice, completely unpredictable. From this perspective, trading in cryptocurrency futures contracts is certainly not a purely "chance-based behavior": the rise and fall of prices is greatly influenced by traditional financial market conditions, policy directions, and sudden events, meaning there are often patterns to their fluctuations.

However, this opinion faces a significant obstacle in China's judicial practice: cryptocurrency perpetual contracts do not fall within the types of futures contracts stipulated by Chinese law. Article 225 of China's Criminal Law defines illegal business operations as "illegally operating securities, futures, or insurance businesses without approval from the relevant national authority or illegally engaging in payment settlement business."

If cryptocurrency perpetual contracts do not legally qualify as futures contracts, then strictly speaking, they also should not be treated under illegal business operations.