What new ideas should be noted when cracking down on crypto mining and issuing transaction documents at the same time

Wu said author | Colin Wu

Editor of this issue | Colin Wu

On the afternoon of September 24, two documents led by the National Development and Reform Commission and the central bank were issued simultaneously. The content is very detailed. What are the specific new ideas worth noting?

First of all, it should be noted that the central bank document was released on September 15, and the mining document was released on September 3. They should have been circulated internally before that, and the government departments issued them publicly on the afternoon of September 24. Previously, the community had rumors that a major policy would be released on the 15th, and it seems that it is true.

There are a few things worth noting about the mining documents.

1. Clearly list virtual currency "mining" activities as an eliminated industry. Implement the "eliminated" enterprise electricity price, with a surcharge of 0.30 yuan per kilowatt-hour. As we all know, the National Development and Reform Commission previously listed it as an eliminated industry in 2019 and then deleted it. After this clear inclusion, there is no longer any doubt about the status of the industry. The path for the regular mining army to go overseas is clearer.

2. The general idea of ​​"closely monitoring, strictly preventing risks, strictly prohibiting increases, and properly handling existing stocks" was proposed. "On the premise of ensuring a smooth transition, scientifically determine the withdrawal timetable and implementation path in combination with the actual conditions of various places." Adhere to active and prudent measures. In the process of promoting the rectification of virtual currency "mining" activities, we must take active actions and advance prudently, so as to accelerate withdrawal, properly resolve contradictions and disputes, and ensure social stability. How to properly handle the existing stocks is still unknown.

3. Conduct a comprehensive investigation of whether there are virtual currency "mining" activities in big data industrial parks and high-tech parks, accurately distinguish data centers from virtual currency "mines", and ensure that there are no gaps in the investigation of local virtual currency "mining"; resolutely prevent power generation companies, especially small hydropower companies, from supplying power to virtual currency "mining" projects in front of the grid, direct power supply through dedicated lines, etc. The measures are very targeted.

Regarding the central bank documents, they are more detailed and contain more content.

1. The crackdown has intensified. Compared with the previous five-ministerial and seven-ministerial documents, this time 10 institutions participated, including the Supreme People's Court, the Supreme People's Procuratorate, the Ministry of Public Security and other powerful departments. In addition, the State Administration of Foreign Exchange also participated, indicating that the crackdown and enforcement efforts may be greater.

2. Stablecoins are valued. Bitcoin, Ethereum, and Tether were clearly mentioned, which were previously collectively referred to as virtual currencies. On July 8, 2021, Fan Yifei, deputy governor of the People's Bank of China, said that the so-called "stablecoins" of some commercial institutions, especially global "stablecoins", may bring risks and challenges to the international monetary system, payment and clearing systems, etc. This shows that stablecoins have begun to enter the vision of decision makers and policy risks are increasing.

3. Increased risks for domestic staff. The notice stated, "Offshore virtual currency exchanges that provide services to Chinese residents through the Internet are also illegal financial activities. Domestic staff of relevant offshore 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."

4. The notice states that 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 will have their related civil acts invalidated and will be responsible for any losses incurred thereby. The notice does not indicate that all investments are invalid, but the definition of "public order and good morals" is rather vague and may be a focus in the future.

5. Allocate responsibilities to governments at all levels, and "provincial-level people's governments shall be responsible for preventing and handling risks related to virtual currency trading speculation within their administrative regions."

6. OTC pressure increases. "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 Operations" in depth, and severely crack down on illegal operations, financial fraud and other criminal activities in virtual currency-related business activities in accordance with the law, and the use of virtual currency to implement money laundering, gambling and other criminal activities and illegal fundraising, pyramid schemes and other criminal activities. "