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The regulation of virtual currency has been upgraded again.
On September 24, the People's Bank of China and ten other departments issued new regulations to crack down on "virtual currency speculation", clarifying that virtual currency-related business activities are illegal financial activities. On the same day, the National Development and Reform Commission and 11 other departments jointly issued a document to crack down on virtual currency "mining", requiring a strict ban on new project investment and construction and accelerating the orderly exit of existing projects.
The cryptocurrency market fell after hearing the news. According to data from Bitcoin Home, the price of Bitcoin fell by more than 4% and Ethereum fell by more than 7% on the same day. Spark Mining Pool announced that it would close its mining pool services in mainland China in accordance with the latest industry regulatory policies. On the 25th, the cryptocurrency trading platform Huobi and the decentralized wallet TokenPocket also stopped providing some services to domestic users. Small trading platforms such as BHEX and BiONE announced their permanent closure.
Industry experts generally believe that the introduction of the new regulations once again demonstrates the regulatory authorities' high-pressure attitude towards strict supervision of virtual currencies, and clarifies the "gray areas" such as pricing services and information intermediaries that were not clearly stipulated before, eliminating the fantasies of currency speculators and preventing related financial risks.
Virtual currency-related businesses are “illegal financial activities”
On September 24, the People’s Bank of China’s official website released the “Notice on Further Preventing and Dealing with the Risks of Virtual Currency Transaction Speculation” (hereinafter referred to as the “Notice”).
The "Notice" proposes to build a multi-dimensional and multi-level risk prevention and disposal system, requiring financial institutions and non-bank payment institutions not to provide services for virtual currency-related business activities; strengthen the registration and advertising management of market entities related to virtual currency; strengthen the management of Internet information content and access related to virtual currency, etc.
"Compared with previous policy regulations, the Notice proposes a new definition in clarifying the essential attributes of virtual currency and related business activities." Xiao Sa, director of the China Banking Law Research Association, said that first, it directly points out that USDT (Tether) is a virtual currency and is not protected by Chinese law; second, providing "pricing services" for virtual currency is also illegal and will be banned in the future; third, the "information intermediary" model of virtual currency transactions is no longer a gray area and has been classified as illegal; fourth, domestic personnel of overseas trading platforms cannot evade legal responsibility; fifth, contracts involving virtual currency investment transactions are invalid on the grounds that they violate public order and good morals.
Ding Feipeng, director of Beijing Liantong Law Firm, said in an interview with the Securities Daily reporter that the "Notice" clarified for the first time the nature of virtual currency-related business activities. The current combination of "on-site currency trading" and "over-the-counter OTC" on mainstream virtual currency trading platforms is no longer controversial in terms of its nature. The exchange business between virtual currencies or the provision of such exchange business to domestic users has been clearly defined as "illegal financial activities."
Ding Feipeng further stated that before the release of the "Notice", the nature of virtual currency was defined differently in judicial practice. Some places believed that it was a "virtual commodity" or "private financial asset" and should be equally protected by law; some places believed that investing in virtual currency was illegal and not protected by law. After the release of the "Notice", judicial organs can declare relevant civil legal acts invalid on the grounds of "violating public order and good morals", and the losses caused by this shall be borne by the participants themselves.
Chen Xiaohua, an expert in the review of major industrial Internet blockchain projects of the Ministry of Industry and Information Technology and chairman of the Blockchain Professional Committee of the China Mobile Communications Association, told reporters that the "Notice" proposes to carry out supervision from the aspects of coordinated linkage among ministries and commissions, strengthening local implementation, all-round monitoring and early warning, and the establishment of information sharing and rapid response mechanisms by provinces. The supervision will be more stringent, wider in scope, and leave no blind spots. It reflects the establishment of a normalized working mechanism and the maintenance of a high-pressure crackdown on virtual currency transactions.
On the same day that virtual currency "mining" was regulated, it was strictly prohibited to increase the amount and properly deal with the existing amount, the National Development and Reform Commission and 11 other departments issued the "Notice on Regulating Virtual Currency "Mining" Activities" (hereinafter referred to as the "Notice").
The "Notice" points out that in accordance with the overall idea of "closely monitoring, strictly preventing risks, strictly prohibiting increases, and properly handling existing stocks", we should give full play to the joint efforts of various regions and departments, strengthen the supervision of the entire upstream and downstream industrial chain of virtual currency "mining" activities, strictly prohibit the addition of new virtual currency "mining" projects, and accelerate the orderly withdrawal of existing projects.
"Virtual currency 'mining' activities consume a lot of energy and electricity, and their blind and disorderly development has an adverse impact on energy conservation and emission reduction." Zheng Lei, chief economist of Baoxing Financial, told the Securities Daily reporter that with coal prices remaining high and electricity consumption for life and production being affected by carbon emission assessments, all regions should speed up the clearance of virtual currency "mining" projects.
Zheng Dingxiang, president of the Shenzhen Information Service Industry Blockchain Association, told the Securities Daily reporter that at present, virtual currency mining has caused excessive energy consumption and increased carbon emissions, and the rapid replacement of mining machines will produce more electronic waste treatment emissions, which runs counter to my country's carbon neutrality development concept and is not conducive to achieving the dual carbon goals.
Specifically, in terms of comprehensively sorting out and investigating virtual currency "mining" projects, the "Notice" proposes to sort out and investigate existing projects to ensure that there are no gaps in the local virtual currency "mining" investigation work; sort out and investigate new projects under construction; and strengthen monitoring and analysis of abnormal electricity consumption.
In fact, in June this year, local governments in Inner Mongolia, Sichuan, Qinghai, Xinjiang and other places took active actions to clear out virtual currency "mining" enterprises, whether they were mainly thermal power or hydropower "mining" enterprises. In September, Hebei and Gansu again deployed special rectification actions against virtual currency "mining" and trading behaviors. It was also proposed that regular supervision will be carried out in the future, and regular inspections will be carried out on virtual currency mining machines "mining", illegal electricity use and electricity theft.
Xiao Sa said that the "Notice" clearly lists "mining" activities as an eliminated industry and does not provide any support. It is strictly forbidden to carry out virtual currency "mining" activities in the name of data centers. Local governments are required not to provide financial and tax support and financial services to "mining" companies, and to crack down on "mining" companies from the source of funds.
Ding Feipeng said that "mining" enterprises are extremely sensitive to electricity prices. The "Notice" clearly includes virtual currency "mining" projects in the "eliminated" enterprise electricity prices and imposes a surcharge. It explicitly prohibits virtual currency "mining" projects from participating in the electricity market, directly cutting off the retreat of some virtual currency "mining" projects. (Securities Daily) |
