Global Times, Mo Kaiwei: Don’t take chances with virtual currencies

Author: Mo Kaiwei

The National Development and Reform Commission recently held a video conference, requiring all provinces, autonomous regions and municipalities to clean up and rectify virtual currency "mining" activities in their regions, and strictly investigate and punish "mining" activities involving computer rooms of state-owned units. Previously, the National Development and Reform Commission, the Central Cyberspace Affairs Commission and 11 other departments jointly issued the "Notice on Rectifying Virtual Currency "Mining" Activities", which clearly required strengthening the supervision of the entire upstream and downstream industry chain of virtual currency "mining" activities, strictly prohibiting the addition of new virtual currency "mining" projects, and accelerating the orderly withdrawal of existing projects.

The above notices and measures have sent a clear signal to the society: virtual currency does not have the same legal status as legal currency and is not protected by Chinese law. All transactions or speculation activities related to virtual currency in China will be classified as illegal financial activities and will be strictly regulated by regulatory authorities, and will be completely banned or closed by regulatory authorities. Overseas virtual currency exchanges that provide services to residents in my country through the Internet are also illegal financial activities. Not only will they be banned by regulatory authorities, but the relevant personnel involved may also be held criminally liable. Those institutions or platforms that attempt to engage in virtual currency speculation in China must end it immediately.

At present, the total value of virtual currencies in the world is growing rapidly, and Bitcoin has expanded from $16 billion five years ago to about $2.3 trillion at present. Virtual currencies have no government endorsement, poor stability, and are subject to many human manipulation factors. Once a huge amount of funds collapses, it is likely to trigger a financial tsunami.

In recent years, despite the strict supervision of financial regulatory authorities, virtual currency transactions have not disappeared in my country. Some virtual currency trading platforms are still engaged in illegal transactions, and some financial institutions still maintain overt or covert relationships with virtual currency trading platforms. In particular, the recent prevalence of speculation in virtual currency transactions such as Bitcoin has disrupted the economic and financial order, spawned illegal and criminal activities such as money laundering, illegal fundraising, fraud, and pyramid schemes, and seriously endangered the property safety of the people.

In order to protect the stability of the financial market, the regulatory authorities must "take drastic measures" against virtual currencies, so that virtual currencies will lose the soil for survival in China. To this end, the focus is on establishing a normalized working mechanism and always maintaining a high-pressure crackdown on virtual currency trading speculation activities. First, it is required to establish a normalized working mechanism of departmental coordination and central-local linkage to provide a strong organizational guarantee for the strict supervision of virtual currency transactions, effectively eliminate the tendency of each doing its own thing in the control of virtual currency trading activities, and give full play to the overall effectiveness of supervision.

Second, we will strengthen the monitoring and early warning of the risks of virtual currency trading speculation. To strictly control virtual currency trading activities, we will provide a sensitive information feedback three-dimensional network, keep track of virtual currency trading dynamics at any time, and effectively plug the possible regulatory vacuum.

The third is to build a multi-dimensional and multi-level virtual currency transaction speculation risk prevention and disposal system. It stipulates that multiple departments such as financial management and Internet information work closely together to take comprehensive measures from cutting off payment channels, disposing of relevant websites and mobile applications in accordance with the law, strengthening the registration and advertising management of relevant market entities, and cracking down on related illegal financial activities and other illegal and criminal acts in accordance with the law; and requires relevant industry associations to strengthen member management and policy publicity, and prevent and deal with virtual currency transaction speculation risks in all aspects. Only in this way can we provide strong prevention and disposal guarantees for the strict control of virtual currency transaction risks, effectively reverse the passive situation of regulatory agencies being at a loss when virtual currency transaction risks occur, and deal with and resolve risks in a timely manner.

In particular, the regulators have placed special importance on protecting the vital interests of the people from losses. Investors must not be complacent or indifferent to this. After the relevant measures were announced, dozens of virtual currency exchanges in China, large and small, have announced that they will stop providing services, or permanently close, or flee China. They were the first to respond quickly. Investors need to see this clearly and arrange to clean up related assets in a timely manner to avoid being "cheated" by related platforms. (The author is a researcher at the China Local Finance Research Institute)