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The madness in the cryptocurrency circle has not stopped, and the people in the cryptocurrency circle are still crazy. On June 21, when the news came out that the central bank interviewed some banks and payment institutions on the issue of virtual currency trading speculation, the mentality of cryptocurrency investors was different. Some are calm while others are worried. One investor said that he received a text message from the bank on the second day of trading to warn that his card was cancelled; some investors believe that it is too difficult for banks to monitor over-the-counter transactions and that there will be no problem as long as preventive measures are taken; some even believe that there are always loopholes among the more than 4,000 banks in the country and some small and medium-sized banks can still operate. In fact, the regulatory authorities issued a ban on virtual currency transactions in 2013, and there are precedents for freezing credit cards. It is becoming increasingly difficult to deposit and withdraw money, but many cryptocurrency investors who have experienced multiple rounds of baptism are no longer "surprised". Many people even have a plan to deal with it. A 21st Century Business Herald reporter found that in order to safely deposit funds, investors switched from exchanges to OTC transactions, and summarized a set of plans to prevent card freezing and unfreezing. There is still a long way to go to block virtual currency transactions. The central bank required all institutions to conduct a comprehensive investigation and identification of virtual currency exchanges and over-the-counter dealers' capital accounts, and promptly cut off the transaction funds payment link. ICBC, ABC, CCB, Postal Savings Bank, Industrial Bank and Alipay subsequently issued announcements, strictly prohibiting virtual currency transactions, and will continue to strengthen investigation and monitoring efforts, and immediately take measures such as suspending account transactions and terminating financial services once discovered. After the five banks and Alipay issued statements, some accounts involved in virtual currency transactions have been blocked. A user on Weibo said that he received a text message from a bank saying that he had transferred money to a virtual investment account many times and needed to bring valid bills to the bank to unfreeze it, otherwise it would be permanently frozen. There are also virtual currency investors who have sold their bitcoins and have not received the principal and income. Another virtual currency investor said that he bought 10,000 USDT through China Construction Bank on June 21, and received a text message from China Construction Bank on the morning of June 22, which said: "It is not allowed to transfer virtual currency related transaction funds through China Construction Bank. Once discovered, China Construction Bank has the right to suspend accounts and cancel client accounts." He said that the bank warned him to cancel his card and he dared not use it for transactions anymore. However, some investors said that they did not receive SMS notifications for the same situation. Some people analyzed that it might be due to the difference in the amount; others thought that it might be because the merchant who sold USDT was regulated, and the transfer to the merchant was implicated. The ban on virtual currency transactions can be traced back to 2013, when the central bank and other ministries and commissions jointly issued the "Notice on Preventing Bitcoin Risks", requiring financial institutions and payment institutions not to directly or indirectly provide other Bitcoin-related services to customers. Subsequently, in 2014 and 2017, the "Notice on Further Strengthening Bitcoin Risk Prevention" and "Notice on Preventing Token Issuance and Financing Risks" were issued, repeatedly prohibiting financial institutions from providing services for virtual currency transactions. In this context, once a bank discovers a virtual currency trading account, the measure it takes is always to freeze it immediately. In order to avoid having their bank accounts frozen, some people choose OTC transactions (over-the-counter transactions). As early as May this year, virtual currency investor Lao Li (pseudonym) told reporters that a friend of his had his bank card frozen during a C2C transaction, probably because the counterparty's account had handled "dirty" money. The so-called C2C means that the buyer and seller transfer money directly through the bank. If one party's account is suspected of money laundering, fraud, etc., both accounts may be frozen, and the transaction proceeds will naturally be difficult to pocket. Once this happens, the participants need to bear all risks themselves, and the exchange becomes a middleman to match buyers and sellers and will not intervene. For some investors, virtual currency has become a kind of "belief" to some extent. On December 16, 2020, the Supreme People's Court, the Supreme People's Procuratorate, the Ministry of Public Security, the Ministry of Industry and Information Technology, and the People's Bank of China jointly issued the "Notice on Severely Cracking Down on and Punishing Illegal Activities of Buying and Selling Telephone Cards and Bank Cards in accordance with the Law", cracking down on illegal activities of buying and selling "two cards" with a "zero tolerance" attitude, further strengthening industry supervision, and punishing those involved in "two cards" crimes across the country, and deeply promoting the "card-cutting" operation to cut off the illegal black and gray industry chain of buying and selling "two cards". Someone in the virtual currency forum analyzed that cracking down on two-card crime is one of the important reasons for the high risk in the cryptocurrency circle. Borrowing, renting, and buying other people's mobile phone cards and bank cards is a very common phenomenon in the cryptocurrency circle. The main reasons are: daily transaction limit for a single bank card; reduced inter-bank transfer fees; real-time transfer of less than 50,000 yuan; multiple mobile phone numbers and bank cards can be registered for multiple merchant accounts for arbitrage; monthly bank flow exceeding a certain limit triggers the bank's anti-money laundering risk control; disperse the risk of concentrated funds to prevent large amounts of funds from being concentrated on a certain bank card and being frozen. The difficulty of depositing and withdrawing funds increases The official severance of the fiat currency payment link of exchanges should be on September 4, 2017, after which OTC transactions became the mainstream trading method. However, the central bank clearly stated in this interview that all institutions should comprehensively investigate and identify the capital accounts of virtual currency exchanges and OTC dealers, and promptly sever the payment link of transaction funds. This means that OTC transactions will also set off a regulatory storm. At that time, seven ministries and commissions issued a document clearly requiring that any so-called token financing trading platform shall not engage in the exchange of legal currency and tokens, "virtual currency", shall not buy or sell tokens or "virtual currency" or act as a central counterparty to buy or sell tokens or "virtual currency", and shall not provide pricing, information intermediary and other services for tokens or "virtual currency". At the same time, financial institutions and non-bank payment institutions shall not directly or indirectly provide account opening, registration, trading, clearing, settlement and other products or services for token issuance financing and "virtual currency", and shall not underwrite insurance business related to tokens and "virtual currency" or include tokens and "virtual currency" in the scope of insurance liability. "After the 94 document in 2017, legal currency transactions can only be done through OTC channels. That is to say, you can't buy and sell various currencies directly with a bank account on the exchange, but you can trade through some third-party merchants." Zhang Jing (pseudonym), a virtual currency investor, told the 21st Century Business Herald reporter, "Now these banks and Alipay have issued announcements saying that they will stop services if they find cryptocurrency transactions, which will cause some trouble for investors. Some merchants may not meet the bank's requirements and are more likely to have their accounts frozen. There may also be some scammers who commit fraud in the name of being able to trade USDT." Zhang Jing (pseudonym) said, "Post the sale information on the exchange and buyers will contact you. Both parties directly transfer money offline using bank accounts. Once the exchange completes the currency transfer, the transaction is complete. As long as the amount is not large or it is not black money, the bank cannot find out, and they don't know what the transferred funds are used for." The 21st Century Business Herald reporter learned that the most common method for virtual currency OTC transactions is to first exchange USDT with legal tender, and then use USDT as payment funds for currency-to-currency transactions. USDT is a type of stablecoin, a token issued by the US Tether company to be equivalent to the US dollar, that is, 1 US dollar is approximately equal to 1 USDT. Stablecoins are linked to legal tender such as the US dollar, other cryptocurrencies or precious metals. The main benefit is that the price is stable and can serve as a general transaction equivalent. Having experienced many upheavals, cryptocurrency investors have long been calm. In the eyes of cryptocurrency player Li Hao (pseudonym), it is difficult to monitor over-the-counter transactions. He told the 21st Century Business Herald reporter, "Large-value transactions, early-morning transfers, and notes with sensitive words are prone to bank account freezes. However, merchants who exchange USDT have become smarter and have many cards and WeChat accounts. Regarding the news on June 21, the reactions in the several groups I was in were very calm, and the old people at most just shouted that the price of the currency had fallen again." Investor Zhou Wei (pseudonym) is a calm old man. He said that "people in the cryptocurrency circle are bold and carefree." Zhou Wei said, "It is indeed difficult to deposit money now. You need to provide bank statements or something, otherwise it is easy to be suspected of black money. Many people in the market have their cards blocked. One of the reasons is that banks have found black money flowing through their accounts through multi-level tracking. Influenced by the news yesterday (June 21), many people have already cut their losses and quit the circle. I am just carefree and am still waiting for an opportunity." Blocking virtual currency transactions is no easy task Why are they so calm? A 21st Century Business Herald reporter found that a complete set of response plans have already been summarized in major forums for Bitcoin and other cryptocurrencies. There are not only strategies to avoid freezing bank accounts for deposits and withdrawals, but also methods for unfreezing bank cards. Card freezing is mainly divided into two situations: bank freezing and judicial freezing, which correspond to different processing methods. The first step after being frozen is to contact the bank where you opened the account or the bank's hotline to obtain three pieces of information: freezing period, freezing method (bank freezing or judicial freezing), and freezing authority. Among them, for bank freezing, you only need to bring the materials required by the bank to cooperate with the processing, explain the reasons for the fund transactions, and it will generally be unfrozen within three working days. There are two types of judicial freezing: 1. Police temporary freezing (36 hours-72 hours). Generally speaking, it means that your card is not a card that directly accepts black money. Wait patiently and it will be automatically unfrozen when it expires; 2. The police request the People's Court to freeze the funds, which can be extended for half a year to one year until the case is closed or withdrawn. So, how do banks and payment institutions monitor virtual currency transactions? The reporter learned that, first, they establish a patrol system for key websites and accounts, and immediately block them once they are discovered; second, they strengthen monitoring of abnormal transaction links, remind suspected payers of risks, and restrict the rights of payees; third, they strengthen merchant management, strictly prohibit virtual currency merchants from entering, and continue to monitor risks for contracted merchants. A payment industry insider said: "This means that in addition to major websites, there will also be risk control models in the transaction chain. For those who frequently change their identities, risk control can also monitor them." Wang Pengbo, chief analyst at Broadcom Consulting, believes that it is not easy to contain virtual currency transactions. On the one hand, a good monitoring model needs to be developed. For example, if the amount of a certain transfer is equivalent to the multiple of the virtual currency transaction price, the account should be considered for sealing. On the other hand, the regular announcement of rectification results will have a certain deterrent effect. Although there were policies a few years ago, the recent interviews with some banks and payment institutions by the central bank mean that the monitoring of virtual currency transactions will be more stringent. Although some institutions are not among the interviews, it does not mean that there are no such transactions, and they all need to be regulated with greater efforts. |
