Full text and answers to reporters' questions | The People's Bank of China and ten other departments issued a notice on further preventing and handling the risks of virtual currency trading speculation

Source: People's Bank of China official website

The People's Governments of all provinces, autonomous regions, and municipalities directly under the Central Government, and the Xinjiang Production and Construction Corps:

Recently, virtual currency trading speculation has been on the rise, disrupting the economic and financial order, breeding gambling, illegal fund-raising, fraud, pyramid schemes, money laundering and other illegal and criminal activities, and seriously endangering the property safety of the people. In order to further prevent and deal with the risks of virtual currency trading speculation and effectively safeguard national security and social stability, in accordance with the "People's Bank of China Law of the People's Republic of China", "Commercial Bank Law of the People's Republic of China", "Securities Law of the People's Republic of China", "Cybersecurity Law of the People's Republic of China", "Telecommunications Regulations of the People's Republic of China", "Regulations on Preventing and Dealing with Illegal Fund-raising", "Regulations on Futures Trading Management", "Decision of the State Council on Cleaning Up and Rectifying Various Local Trading Venues to Effectively Prevent Financial Risks", "Implementation Opinions of the General Office of the State Council on Cleaning Up and Rectifying Various Trading Venues", and other regulations, the following matters are hereby notified:

1. Clarify the essential attributes of virtual currency and related business activities

(I) Virtual currencies do not have the same legal status as legal tender. Virtual currencies such as Bitcoin, Ethereum, and Tether have the following main characteristics: they are issued by non-monetary authorities, use encryption technology and distributed accounts or similar technologies, and exist in digital form. They are not legal tender and should not and cannot be circulated and used as currency in the market.

(II) Virtual currency-related business activities are illegal financial activities. Virtual currency-related business activities such as the exchange of legal tender and virtual currency, the exchange of virtual currencies, the purchase and sale of virtual currency as a central counterparty, the provision of information intermediary and pricing services for virtual currency transactions, token issuance financing, and virtual currency derivative transactions are suspected of illegal financial activities such as illegal sale of token tickets, unauthorized public issuance of securities, illegal operation of futures business, and illegal fundraising. All such activities are strictly prohibited and resolutely banned in accordance with the law. Those who engage in related illegal financial activities that constitute a crime shall be held criminally liable in accordance with the law.

(III) The provision of services to residents in my country through the Internet by overseas virtual currency exchanges is also an illegal financial activity. Domestic staff of relevant overseas virtual currency exchanges, as well as legal persons, non-legal organizations and natural persons who knowingly or should have known that they are engaged in virtual currency-related businesses and still provide them with marketing, payment settlement, technical support and other services, shall be held accountable in accordance with the law.

(IV) There are legal risks in participating in virtual currency investment and trading activities. Any legal person, non-legal person organization or natural person who invests in virtual currency and related derivatives and violates public order and good morals shall have the relevant civil legal acts invalid and shall bear the losses caused by them; if they are suspected of disrupting financial order and endangering financial security, they shall be investigated and dealt with by relevant departments in accordance with the law.

II. Establish and improve a working mechanism to address the risks of virtual currency trading speculation

(V) Departmental coordination and linkage. The People's Bank of China will work with the Central Cyberspace Affairs Commission, 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 for Market Regulation, the China Banking and Insurance Regulatory Commission, the China Securities Regulatory Commission, the State Administration of Foreign Exchange and other departments to establish a work coordination mechanism to jointly solve major problems in work and supervise and guide all regions to carry out work in accordance with unified arrangements.
(VI) Strengthen local implementation. Provincial-level people's governments shall be responsible for preventing and handling risks related to virtual currency trading speculation within their administrative regions. Local financial regulatory departments shall take the lead, and branches of the State Council's financial management departments, as well as cybersecurity and telecommunications, public security, market supervision and other departments shall participate in establishing a regular 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.

III. Strengthening the monitoring and early warning of risks of virtual currency trading speculation

(VII) Comprehensive monitoring and early warning. Provincial people's governments should give full play to the role of local monitoring and early warning mechanisms, combine online monitoring with offline investigations, and improve the accuracy and efficiency of identifying and discovering virtual currency trading speculation activities. The People's Bank of China, the Central Cyberspace Affairs Commission and other departments continue to improve the technical means of monitoring encrypted assets, and realize the full-chain tracking and full-time information backup of virtual currency "mining", trading, and exchange. Financial management departments guide financial institutions and non-bank payment institutions to strengthen the monitoring of funds involved in virtual currency transactions.

(VIII) Establish information sharing and rapid response mechanisms. Under the leadership of provincial-level people's governments, local financial regulatory authorities will work with branches of the State Council's financial management departments, cybersecurity and informatization departments, public security agencies, etc. to strengthen the effective connection between online monitoring, offline investigation, and fund monitoring, and establish information sharing and cross-verification mechanisms for virtual currency trading speculation, as well as early warning information transmission, verification, and disposal rapid response mechanisms.

IV. Building a multi-dimensional and multi-level risk prevention and disposal system

(IX) Financial institutions and non-bank payment institutions shall not provide services for virtual currency-related business activities. Financial institutions and non-bank payment institutions shall not provide services such as account opening, fund transfer, and clearing and settlement for virtual currency-related business activities, shall not include virtual currency in the scope of collateral, shall not conduct insurance business related to virtual currency or include virtual currency in the scope of insurance liability, and shall promptly report any clues of illegal and irregular issues to the relevant departments.
(10) Strengthen the management of Internet information content and access related to virtual currency. Internet companies shall not provide online business premises, commercial displays, marketing and promotion, paid traffic diversion and other services for virtual currency-related business activities. If they find clues of illegal and irregular problems, they should report them to the relevant departments in a timely manner and provide technical support and assistance for related investigations and investigative work. The Internet information and telecommunications authorities shall promptly close websites, mobile applications, mini-programs and other Internet applications that carry out virtual currency-related business activities in accordance with the law based on the clues of problems transferred by financial management departments.

(XI) Strengthen the registration and advertising management of market entities related to virtual currencies. Market regulatory authorities shall strengthen the registration management of market entities. The registered names and business scopes of enterprises and individual businesses shall not contain words or content such as "virtual currency", "virtual assets", "cryptocurrency", "encrypted assets", etc. Market regulatory authorities shall, together with financial management departments, strengthen the supervision of advertisements related to virtual currencies in accordance with the law and promptly investigate and deal with related illegal advertisements.

(XII) Severely crack down on illegal financial activities related to virtual currencies. After discovering clues of illegal financial activities related to virtual currencies, local financial regulatory departments shall, together with relevant departments such as branches of the State Council’s financial management departments, promptly investigate and identify, properly handle, and seriously investigate the legal responsibilities of relevant legal persons, non-legal organizations and natural persons. If a crime is involved, the case shall be transferred to the judicial authorities for investigation and punishment in accordance with the law.

(13) Severely crack down on criminal activities involving virtual currencies. The Ministry of Public Security has deployed public security organs across the country to continue to carry out the "Special Operation to Combat Money Laundering Crimes", "Special Operation to Combat Cross-border Gambling", and "Card Cutting Operation", and severely crack down on illegal operations, financial fraud and other criminal activities in virtual currency-related business activities, money laundering, gambling and other criminal activities carried out using virtual currencies, and illegal fundraising, pyramid schemes and other criminal activities using virtual currencies as a gimmick.

(XIV) Strengthen industry self-discipline management. The China Internet Finance Association, the China Payment and Clearing Association, and the China Banking Association shall strengthen member management and policy publicity, advocate and urge member units to resist illegal financial activities related to virtual currencies, and punish member units that violate regulatory policies and industry self-discipline rules in accordance with relevant self-discipline management regulations. Relying on various industry infrastructures, carry out virtual currency transaction speculation risk monitoring and promptly transfer problem clues to relevant departments.

V. Strengthening organization and implementation

(15) Strengthen organizational leadership and overall coordination. All departments and regions should attach great importance to the work of responding to the risks of virtual currency trading speculation, strengthen organizational leadership, clarify work responsibilities, and form a long-term working mechanism with central coordination, local implementation, integration of departments and regions, and joint responsibility, maintain a high-pressure situation, dynamically monitor risks, take effective measures to prevent and resolve risks, protect the property safety of the people in accordance with the law, and make every effort to maintain economic and financial order and social stability.

(XVI) Strengthen policy interpretation and publicity and education. All departments, regions and industry associations should make full use of various media and other communication channels to publicize the illegality, harmfulness and manifestations of virtual currency speculation and other related business activities to the public through legal policy interpretation, typical case analysis, investment risk education, etc., and enhance the public's risk prevention awareness.

People's Bank of China Cyberspace Affairs Commission Supreme People's Court Supreme People's Procuratorate Ministry of Industry and Information Technology Ministry of Public Security State Administration for Market Regulation China Banking and Insurance Regulatory Commission China Securities Regulatory Commission State Administration of Foreign Exchange
September 15, 2021

The relevant person in charge of the People's Bank of China answered reporters' questions on the "Notice on Further Preventing and Dealing with the Risks of Virtual Currency Trading Speculation"

Recently, the People's Bank of China and ten other departments issued the "Notice on Further Preventing and Dealing with the Risks of Virtual Currency Trading Speculation" (hereinafter referred to as the "Notice"). The relevant person in charge of the People's Bank of China answered reporters' questions on related issues.

1. What is the background for the issuance of the “Notice”?

In recent years, speculation in virtual currency transactions such as Bitcoin has been prevalent, disrupting the economic and financial order, breeding illegal and criminal activities such as money laundering, illegal fundraising, fraud, and pyramid schemes, and seriously endangering the property safety of the people. In accordance with the decisions and arrangements of the CPC Central Committee and the State Council, the People's Bank of China, together with relevant departments, has issued a series of policy measures to clarify that virtual currency does not have the status of legal tender, prohibit financial institutions from conducting and participating in virtual currency-related businesses, clean up and ban domestic virtual currency transactions and token issuance and financing platforms, and continue to carry out risk warnings and financial consumer education, achieving positive results. In order to establish a normalized working mechanism and always maintain a high-pressure crackdown on virtual currency trading speculation, the People's Bank of China and other departments have drafted the "Notice" based on the new risk situation and summarizing previous work experience.

2. How does the “Notice” characterize virtual currency and related business activities?

my country's regulatory policy on virtual currencies is clear and consistent. The Notice once again emphasizes that virtual currencies such as Bitcoin, Ethereum, and so-called stablecoins such as Tether, which are issued by non-monetary authorities, use encryption technology, distributed accounts or similar technologies, and exist in digital form, do not have the same legal status as legal tender and cannot be circulated in the market as currency. The Notice clearly points out that virtual currency exchange, buying and selling virtual currencies as a central counterparty, providing matchmaking services for virtual currency transactions, token issuance financing, and virtual currency derivative transactions are all illegal financial activities, which are strictly prohibited and resolutely banned in accordance with the law; overseas virtual currency exchanges providing services to residents in my country through the Internet are also illegal financial activities.

3. What work measures are proposed in the “Notice”?

First, a regular working mechanism of departmental coordination and central-local linkage will be established. At the central level, ten departments including the People's Bank of China, the Central Cyberspace Affairs Commission, and the Ministry of Public Security will establish a coordination mechanism to coordinate and promote the implementation of the work as a whole; at the local level, provincial-level people's governments will implement local risk management responsibilities and crack down on illegal financial activities related to virtual currencies in their jurisdictions in accordance with the law.

Second, strengthen the monitoring and early warning of the risks of virtual currency trading speculation. The People's Bank of China and the Central Cyberspace Affairs Commission will improve the functions of the virtual currency monitoring technology platform to improve the accuracy and efficiency of identifying and discovering virtual currency trading speculation activities. Financial institutions and non-bank payment institutions will strengthen the monitoring of funds involved in virtual currency transactions. All departments and regions will strengthen the effective connection between online monitoring, offline investigation and fund monitoring, and establish an information sharing and cross-verification mechanism.

Third, a multi-dimensional and multi-level virtual currency trading speculation risk prevention and disposal system is established. Financial management departments, Internet information departments, telecommunications departments, public security departments, and market supervision departments work closely together to cut off payment channels, deal with related websites and mobile applications in accordance with the law, strengthen the registration and advertising management of related market entities, and crack down on related illegal financial activities and other illegal and criminal activities in accordance with the law. Relevant industry associations strengthen member management and policy publicity to prevent and deal with virtual currency trading speculation risks in all aspects.

4. What are the follow-up work arrangements?

Cracking down on speculation in virtual currency transactions is an important decision and deployment made by the CPC Central Committee and the State Council. It is an inevitable requirement for implementing the people-centered development concept and the overall national security concept. All departments and regions will conscientiously implement the various measures proposed in the Notice, build a long-term working mechanism with central coordination, local implementation, integration of departments and regions, and joint responsibility, always maintain a high-pressure situation, dynamically monitor and promptly deal with related risks, resolutely curb the speculation in virtual currency transactions, severely crack down on illegal financial activities and illegal and criminal activities related to virtual currency, protect the property safety of the people in accordance with the law, and make every effort to maintain economic and financial order and social stability.