What are the legal risks of perpetual contracts in the cryptocurrency market that are linked to gold, silver, and crude oil?

Authored by: Xiao Sa Law Team

Crypto circle partners generally believe that perpetual contracts are a type of cryptocurrency derivative and a financial product within the crypto industry that uses blockchain technology and trading rules that are highly similar to traditional futures contracts.

The Sa Jie team has noticed that, as the price volatility of gold and other precious metals in 2026 continues to fluctuate, and the ongoing energy crisis triggered by geopolitical conflicts keeps pushing up crude oil prices, exchanges are actively creating innovative crypto perpetual contract products that mirror the prices of products such as gold, silver, and crude oil. This once attracted a large amount of capital to enter the market to trade.

So, compared with the earlier “traditional gameplay” that mirrored BTC and ETH prices, does this kind of innovative perpetual contract have any differences in legal characterization? Is it closer to or farther from the criminal red line? Today, the Sa Jie team will discuss this issue with everyone in detail.

I. Legal characterization under Chinese law for perpetual contracts in the crypto circle

From the trading rules and trading methods, crypto perpetual contracts are similar to traditional futures contracts. The specific characteristics are as follows:

It must be made clear that, under Chinese law, traditional perpetual contracts in the crypto circle are not financial futures contracts in the traditional sense, and BTC and ETH are not any kind of legally permitted futures options products.

Pursuant to Article 17 of the “Futures and Derivatives Law of the People’s Republic of China,” “The listing of futures contract varieties and standardized options contract varieties shall comply with the provisions of the State Council’s futures supervision and administration authority, and shall be submitted by the futures trading venue to the State Council’s futures supervision and administration authority for registration in accordance with law.” And according to information released by the China Futures Market Monitoring Center in 2025, as of October 31, 2025, there were 160 futures options varieties legally listed in China’s futures market in total, namely 80 commodity futures, 59 commodity options, 8 financial futures (4 stock index futures + 4 treasury bond futures), 3 stock index options, 9 ETF options, and 1 index futures (freight forwarding European route). Virtual currencies such as BTC and ETH do not fall under any futures options varieties permitted by China.

In 2021, after the ten ministries issued the “Notice on Further Preventing and Disposing of the Risks of Speculation in Virtual Currency Transactions” (abbreviated as the “9.24 Notice”) [Note: This regulatory document was replaced in 2026 by the “Notice on Further Preventing and Disposing of Relevant Risks of Virtual Currency, etc.” (abbreviated as the “2.6 Notice”)], in practice, judicial authorities have already clearly categorized crypto circle futures contracts as the category of “transactions of financial products related to virtual currencies,” and characterized them as illegal financial activities.

II. Criminal red line risk of perpetual contracts in the crypto circle

First, the conclusion: in current judicial practice in China, the behavior of opening and running crypto perpetual contract trading that mirrors BTC and ETH prices has already been clearly characterized as the crime of operating a gambling house.

(A) Typical cases

The most well-known and influential case is the series of gambling-house cases involving B··X of a certain company in Chengdu, Sichuan, handed down in the second instance in 2025.

At first, B··X was only a typical cryptocurrency exchange, offering services such as cryptocurrency exchange and spot trading. In the first half of 2021, persons including Ji Moumou launched the perpetual contract trading function on B··X; users could place wagers by using USDT as the payment/settlement currency through setting high leverage to magnify the wager principal. The underlying was the price movements of cryptocurrencies such as BTC and ETH, and users could trade perpetual contracts. In practice, after users充值 USDT, they could choose contract orders for different cryptocurrency types such as BTC and ETH, and choose either “open long” or “open short.” B··X’s ordinary perpetual contracts could add 100x leverage, while the “crazy contract”玩法 could add extremely high leverage ranging from 125x to 1000x. After confirming to open positions, the trade content could not be changed; perpetual contracts had no expiration date.

B··X had features including market data reference, forced liquidation, matched trading, a platform-against-bet (house) transaction, and agent rebates. As of the time the case was filed, B··X had more than 270,000 contract trading users, including more than 60,000 active users. Through charging fees during user withdrawals and wagering, as well as profiting from forced liquidations and house-against-bet outcomes, the platform accumulated net profits of about RMB 300 million.

(B) Reasons why perpetual contracts in the crypto circle are characterized as the crime of operating a gambling house

The core reason this case was characterized as the crime of operating a gambling house is that, in the view of China’s judicial authorities, the trading behavior involving virtual currency perpetual contracts is a gambling activity in the sense of the Criminal Law.

What is “gambling” in the sense of the Criminal Law? Article 303 of China’s Criminal Law [Gambling Crime] provides: “Whoever gathers others to gamble for profit, or gambles as a business, shall be sentenced to fixed-term imprisonment of not more than three years, criminal detention, or public surveillance, and shall also be fined.” In the key judicial interpretations and normative documents jointly issued and/or issued separately by the Supreme People’s Court, the Supreme People’s Procuratorate, and the Ministry of Public Security—such as the “Interpretation on Several Issues Concerning the Specific Application of Law in Handling Criminal Cases of Gambling,” the “Opinions on Several Issues Concerning the Application of Law in Handling Cases of Opening Gambling Houses Using Gambling Machines,” and the “Notice on Several Issues Concerning the Application of Law in Handling Cases of Illegal Gambling,” etc.—there is also no definition of the concept of “gambling” itself, as if it were a self-evident concept that does not require explanation.

Only by looking at guiding cases can we find a relatively clear answer. In the guidance case No. 752, Zhou Bangquan et al. gambling case, in the Criminal Trial Reference, Issue No. 84, the judge cited the definition of “gambling” from the “Modern Chinese Dictionary”: gambling means taking money or valuables as stakes and betting on win or loss through forms such as card games or dice throwing. Gambling games appeared as early as the Xia Dynasty more than 3,500 years ago—the earliest known gambling game was liubo. After that, as society developed, gambling forms continued to be revamped; the number of types increased, and the harms became increasingly severe. New gambling forms are no longer limited to using playing cards or dice as the carrier: therefore, based on this development, we believe that as long as a certain form is used as the carrier and money or valuables are used as stakes to bet on win or loss, it falls within the category of gambling. The defendant’s conduct in this case was to make predictions based on “Mark Six” (liuliuhao) information, betting on win or loss with money or valuables; characterized as gambling, it matches the public’s long-standing understanding of the essence of gambling.

As can be seen above, gambling conduct in the sense of China’s Criminal Law is actually relatively broad. As long as it can be summarized as “bet on big or small, and bet on who wins or loses,” there is no obstacle to defining it as gambling conduct.

Returning the perspective to perpetual contracts in the crypto circle. In fact, perpetual contracts in the crypto circle are very similar to guidance case No. 146 in the Supreme People’s Court Case Database, the Chen Qinghao, Chen Shujuan, and Zhao Yanhai case concerning the operation of a gambling house (filing/index number: 2020-18-1-286-001). The pattern of the suspect’s conduct in this case is also relatively similar. In this case, the defendant acted under the name of “binary options” trading, and solicited “investors” via the internet outside of statutory futures trading venues, using the price trend of a foreign exchange variety over a future period as the trading target. Profits and losses were determined by “buying up” or “buying down.” The “investors” who correctly predicted the direction of “up or down” gained profits; the principal of those who predicted incorrectly belonged to the net platform (the house/issuer). The judge believed that because in this trading model the user’s profit and loss result is not linked to the actual magnitude of price change, but only depends on whether the underlying product’s price goes up or down, its essence still falls into the “bet on big or small, and bet on who wins or loses” category; therefore, it is a gambling act disguised under the outward form of options trading.

© Do perpetual contracts in the crypto circle constitute the crime of illegal business operation?

With the increasing number of cases involving perpetual contracts in the crypto circle, some views in practice also hold that perpetual contracts in the crypto circle should not be characterized as the crime of operating a gambling house, but rather as the crime of illegal business operation.

Scholars and legal practitioners holding this view mainly think that the “gambling” conduct in crimes such as the “crime of gambling” and “crime of operating a gambling house” in China must be a purely “chance-based” act—one where the result is similar to rolling dice at random and is completely unpredictable. From this perspective, trading crypto futures contracts is certainly not a purely “chance-based” act: the rise and fall of coin prices are greatly influenced by traditional financial market conditions, policy directions, sudden events, and so on, so their rise and fall often have traceable indicators.

However, the biggest obstacle to this view in China’s judicial practice is that the perpetual contracts in the crypto circle are not a type of futures contract provided for under Chinese law. Article 225 of China’s Criminal Law on the crime of illegal business operation provides that it is “engaging in illegal operation of securities, futures, or insurance business without approval from the relevant national competent authorities, or illegally engaging in capital payment and settlement business.”

If perpetual contracts in the crypto circle are, by their legal nature, not a futures contract, then strictly speaking they should not be punished as the crime of illegal business operation either.

Written at the end

In short, crypto perpetual contracts that mirror the prices of commodities such as gold, silver, and crude oil still face serious legal risks under China’s legal framework. Although the underlying asset has shifted from virtual currencies to traditional bulk commodities, the core trading model still has the gambling essence of “using money or valuables as stakes to bet on price movements.” There is no obvious difference in legal characterization from the BTC and ETH perpetual contracts that have already been clearly recognized in judicial practice as the crime of operating a gambling house.

China takes a “ban across the entire chain” approach toward virtual-currency-related financial activities directed at residents of Mainland China. The 2026 “2.6 Notice” further strengthens the regulatory stance, and historical cases have already clearly shown that regardless of how the underlying assets are changed, as long as the trading mechanism exhibits the characteristics of “betting on big or small and betting on win or loss,” platform operators may face criminal accountability for the crime of operating a gambling house. Partners must be especially careful.