Four months after the three major associations spoke out, the central bank once again “proclaimed” virtual currency speculation risks. On September 24, the Central Bank and other ten departments issued the “Notice on Further Preventing and Disposing of the Risks of Virtual Currency Trading Speculation” (hereinafter referred to as the “Notice”), clarifying the essential attributes of virtual currencies and related business activities, and establishing a sound response to the risks of virtual currency trading speculation Strengthen the monitoring and early warning of risks of virtual currency trading speculation, and build a multi-dimensional and multi-level risk prevention and disposal system.
The relevant person in charge of the People’s Bank of China said in response to reporters that the “Notice” once again emphasized the virtual currency, such as Bitcoin, Ethereum, etc., that have the characteristics of being issued by non-monetary authorities, using encryption technology, distributed accounts or similar technologies, and existing in digital form. The so-called stablecoins, including TEDA coins, do not have the same legal status as legal tender, and cannot be circulated in the market as currency. The “Notice” clearly states that virtual currency exchange, virtual currency trading as a central counterparty, provision of matching services for virtual currency transactions, token issuance financing, and virtual currency derivative transactions are all illegal financial activities and are strictly prohibited. , Resolutely banned in accordance with the law; overseas virtual currency exchanges to provide services to Chinese residents through the Internet are also illegal financial activities.
As of press time, the price of virtual currency plummeted again. Within 24 hours, Bitcoin fell 4.24% and Ethereum fell 8.29%.
Full chain supervision of “mining”, transaction and exchange
With the hype of virtual currency, chaos in the currency circle frequently occurs. A reporter searched for keywords on the Chinese Judgment Documents website and found that a total of 5,681 documents related to “virtual currency” on the website. Among them, there are 580 judgments in criminal cases in 2020 and 210 in 2021.
In these cases, virtual currencies played different roles. For example, in some cases, virtual currency acts as an accomplice of an MLM organization and requires the purchase of virtual currency to qualify for membership and rebates; some cases are suspected of fraud, creating the illusion of making money on the platform, and inducing customers to invest money into the platform to speculate Bitcoin Currency etc.
“my country’s regulatory policies on virtual currencies are clear and consistent.” said the relevant person in charge of the People’s Bank of China.
From the perspective of industry insiders, the ten departments jointly issued the “Notice”, which means that the domestic virtual currency supervision and rectification has been upgraded again.
The “Notice” establishes a sound working mechanism to deal with the risks of virtual currency trading speculation. On the one hand, the departments are coordinated and linked. The People’s Bank of China, together with the Central Cyberspace Administration, the Supreme People’s Court, the Supreme People’s Procuratorate, the Ministry of Industry and Information Technology, the Ministry of Public Security, the State Administration of Market Supervision, the China Banking and Insurance Regulatory Commission, the China Securities Regulatory Commission, and foreign exchange bureaus, has established a work coordination mechanism to coordinate the resolution of major issues in the work. Issues, supervise and guide all regions to carry out their work according to unified deployment; on the other hand, strengthen local implementation. The provincial people’s governments are generally responsible for preventing and disposing of risks related to virtual currency transaction speculation within their administrative regions. The local financial regulatory authorities will take the lead, with the participation of branches of the financial regulatory department of the State Council and the competent authorities of cybersecurity and informatization, telecommunications, public security, and market supervision. Establish a normalized working mechanism, coordinate and mobilize resources, actively prevent and properly handle issues related to virtual currency trading speculation, and maintain economic and financial order and social harmony and stability.
In addition, it has also clarified all-round monitoring and early warning of virtual currency hype. The “Notice” requires that the provincial people’s governments give full play to the role of local monitoring and early warning mechanisms, and combine online monitoring and offline investigation to improve the accuracy and efficiency of identifying and discovering virtual currency trading hype activities. The People’s Bank of China, the Central Cyberspace Administration of China and other departments continue to improve the technical means of encrypted asset monitoring to realize the full-chain tracking and full-time information backup of virtual currency “mining”, transaction, and exchange. Financial management departments guide financial institutions and non-bank payment institutions to strengthen the monitoring of virtual currency transaction funds.
Regulation followed
In recent years, Bitcoin and other virtual currency transaction hype activities have prevailed, disrupting economic and financial order, breeding money laundering, illegal fund-raising, fraud, pyramid schemes and other illegal and criminal activities, and seriously endangering the safety of people’s property.
The virtual currency hype has been extremely crazy in the past year. Taking Bitcoin as an example, it reached a peak of more than 60,000 US dollars in April this year, which also caused many new players to speculate in influx. With the “violent beating” of a series of regulatory measures, the price of cryptocurrency began to plummet.
In fact, this round of supervision and remediation can be traced back to May 18 this year. At that time, China’s three major industry associations collectively voiced their efforts to lay a precaution against this round of domestic virtual currency supervision and rectification. The three major industry associations issued the “Announcement on Preventing the Risk of Virtual Currency Trading Hype” requiring that member institutions must not carry out virtual currency transaction exchange and other related financial services, resolutely resist illegal financial activities related to virtual currency, and do not provide accounts and payments for virtual currency transactions Settlement, publicity and display services, and remind the public to strengthen risk prevention awareness, do not participate in virtual currency-related transaction hype activities, and beware of personal funds damage.
On May 21, the Financial Committee meeting emphasized the need to resolutely prevent and control financial risks. Strengthen the supervision of platform enterprises’ financial activities. Crack down on Bitcoin mining and trading activities, and resolutely prevent individual risks from being transmitted to the social field.
On June 21, the relevant departments of the People’s Bank of China held talks with Industrial and Commercial Bank of China, Agricultural Bank of China, Construction Bank, Postal Savings Bank of China, Industrial Bank and Alipay (China) Network Technology Co., Ltd. on the issue of providing services for virtual currency transactions by banks and payment institutions. Some banks and payment institutions.
The central bank pointed out that virtual currency trading activities disrupt the normal economic and financial order, breed the risks of illegal cross-border transfer of assets, money laundering and other illegal and criminal activities, and seriously infringe the people’s property safety. Banks and payment institutions must strictly implement the “Notice on Preventing Bitcoin Risks” and “Announcement on Preventing Token Issuance Financing Risks” and other regulatory requirements, earnestly fulfill their customer identification obligations, and must not provide account opening, registration, and registration for related activities. Products or services such as trading, clearing, and settlement.
In addition to financial risks, the high energy consumption of Bitcoin has also attracted regulatory attention. On May 25, the Inner Mongolia Development and Reform Commission issued the “Eight Measures to Resolutely Combat and Punish Virtual Currency “Mining” (Draft for Solicitation of Comments)”, stating that relevant companies and related personnel that have been involved in virtual currency mining activities will be included in dishonesty in accordance with relevant regulations. Blacklist; For public officials who use their positions to participate in virtual currency mining or provide convenience and protection for them, they will all be transferred to the discipline inspection and supervision organs for processing.
Exit mode is on
On the one hand, the control of the virtual currency market has been substantially tightened, and on the other hand, the currency price and transaction volume have plummeted.
For example, a co-founder of Ethereum previously stated that he would no longer be involved in the field of cryptocurrency; one of the founders of Dogecoin also severely criticized encryption technology, saying that after years of research, the main purpose of virtual currency is to avoid taxes and evade supervision. Combining with artificially enforced scarcity, amplify the wealth of its supporters, and vowed to never set foot in the currency circle again in this life.
Under the supervision of a series of “heavy hammers”, some large virtual currency exchanges and software service providers have also been impacted in this round of supervision and opened a clearing and withdrawal mode.
On July 6, the Business Management Department of the People’s Bank of China (Beijing) and the Beijing Municipal Financial Supervision and Administration Bureau jointly issued the “Risk Reminders on Preventing Virtual Currency Trading Activities”. The company cleaned up and rectified, ordered the company to cancel, and the official website has been suspended.
On July 22, Beijing Huobi Tianxia Network Technology Co., Ltd. (Huobi Tianxia) resolved to dissolve and intend to apply to the company registration authority for deregistration. Creditors are requested to declare their claims to the liquidation team within 45 days from the date of the announcement. It is reported that this institution is the main body registered in Beijing in the early years of Huobi.
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