Dong's case | Virtual currencies are in turmoil, fighting against regulation in various countries

On July 20, Bitcoin fell below $30,000, and rebounded on July 22. As of 3 p.m. on July 22, the price of Bitcoin was $32,000. Since Bitcoin hit a record high on April 14 this year, it has fallen by almost half.

The game behind virtual currency is still going on. Investors believe that the main players in the game are themselves and the market. They occasionally blame regulation for the sharp drop in virtual currency, believing that virtual currency has strong property value due to its scarcity. The more you own, the more wealth you have - regardless of the fact that the property attribute of virtual currency comes from being linked to legal currency - it is ultimately just a financial product bubble. If one day, virtual currency becomes a circulating currency in the world, what is the difference between its value and the current legal currency?

"The price is too high!" "Once again, it rings the alarm bell. We must respect the market"... The plunge on the 20th caused investors to wail. As virtual currencies shrink day by day, some people have planned to "cut losses" to stop losses, but many are still waiting and watching.

But in fact, this is not the first time that Bitcoin has plummeted. Early players have already withdrawn from the market one after another, and the reason why it still remains popular is obviously not because of the regulatory attitude - but the statements of various business giants.

After Zuckerberg of Libra, crazy Musk has become the "spokesperson" of Bitcoin. On March 24, 2021, Tesla's official website in the United States announced that it supports the use of BTC (Bitcoin) for payment. Just before that, on February 18, the world's first Bitcoin ETF (PurposeBitcoin ETF, code BTCC) was listed on the Toronto Stock Exchange.

Ray Dalio, founder of Bridgewater Associates, said at the Bitcoin Consensus Conference that there will be more inflation in the future. He personally prefers to buy Bitcoin rather than bonds and also holds some Bitcoin himself. He also believes that the second largest cryptocurrency Ethereum will play a greater role.

In contrast, in February 2021, U.S. Treasury Secretary Yellen said in an interview with the media that she was very worried that Bitcoin would be used for illegal financing. "This is an extremely inefficient way of trading, and the energy consumed to process these transactions is astonishingly large."

On May 26, SEC Chairman Gary Gensler called on Congress to provide more funding and authoritative support to help the SEC strengthen its supervision of virtual currencies and SPAC (special purpose acquisition companies) listings at a congressional hearing. "The most pressing issue is to regulate cryptocurrency exchanges."

The US regulatory attitude seems much more vague than that of China, perhaps due to the impact of Wall Street capital.

In China, since the seven ministries and commissions jointly issued a document on September 4, 2017 to ban token issuance and financing and virtual currency transactions (hereinafter referred to as the "9.4 Announcement"), the regulatory authorities have maintained a high-pressure stance on virtual currency supervision. However, China has always been a major global virtual currency mining center. With the rising prices of virtual currencies since the end of 2020, domestic investors have been increasingly speculating in virtual currencies, and supervision has been upgraded again.

On May 18, 2021, the Internet Finance Association of China, the China Banking Association, and the China Payment and Clearing Association jointly announced that conducting legal currency and virtual currency exchanges and virtual currency exchanges, buying and selling virtual currencies as a central counterparty, providing information intermediary and pricing services for virtual currency transactions, token issuance financing and virtual currency derivative transactions and other related trading activities violate relevant laws and regulations, and are suspected of illegal fundraising, illegal issuance of securities, illegal sale of tokens and tickets and other criminal activities.

On May 21, Vice Premier Liu He presided over the 51st meeting of the Financial Stability and Development Committee of the State Council, clearly proposing to crack down on Bitcoin mining and trading, and resolutely prevent individual risks from spreading to the social field. This is the highest level of China's crackdown on virtual currencies so far, and the targets of the crackdown have been expanded from trading to mining.

After setting the tone, Inner Mongolia issued the first local detailed rules to combat virtual currency mining. On the evening of May 25, the official WeChat account of the Inner Mongolia Development and Reform Commission announced that in accordance with the deployment requirements of the Financial Committee meeting on combating Bitcoin mining and trading, it will further clean up virtual currency mining and strengthen the crackdown and punishment. It is publicly soliciting opinions on the "Eight Measures on Resolutely Combating and Punishing Virtual Currency "Mining" Behavior" (hereinafter referred to as the "Eight Measures").

The "Eight Measures" clearly state: For industrial parks, data centers, self-contained power plants and other entities that provide venues and electricity support for virtual currency mining companies, their energy consumption budget indicators will be reduced; for big data centers, cloud computing companies and other entities that engage in mining, the competent authorities will cancel all preferential policies and withdraw from the Inner Mongolia Multilateral Electricity Trading Market; for communications companies, Internet companies and other companies that engage in mining, the competent authorities will revoke their value-added telecommunications business licenses in accordance with the law and hold them accountable; for mining projects that connect to power sources without approval, their illegal electricity theft will be transferred to judicial authorities for handling in accordance with the law; for enterprises, individuals and other entities that engage in illegal activities such as money laundering in the form of virtual currency, they will be transferred to judicial authorities for handling in accordance with the law; relevant companies and relevant personnel engaged in mining activities will be included in the untrustworthy blacklist in accordance with relevant regulations.

However, the difficulties encountered in the actual operation process seem to further verify the "original sin" of virtual currency - it was created to provide a breeding ground for crime from the very beginning.

Industry insiders said that the mines are involved with local interests, and some mines are even opened by relatives of local leaders, "there are deep waters". "The mines also contribute to local taxation and waste water and electricity consumption. They may have been removed during the inspection, and moved back when the inspection team left.