Will the cryptocurrency industry be in trouble due to stricter regulation?

Original title: Will the cryptocurrency industry be “cooled down” due to stricter regulation?

Source: Futures Daily

Author: Shi Lemeng

Since the Internet Finance Association of China, the China Banking Association and the Payment and Clearing Association of China jointly issued the "Announcement on Preventing the Risk of Speculation in Virtual Currency Transactions" on May 18, the regulatory authorities have once again taken action to crack down on speculation in virtual currency transactions such as Bitcoin.

On June 21, a reporter from Futures Daily learned from the official website of the central bank that in order to thoroughly implement the relevant decisions and arrangements of the CPC Central Committee and the State Council, implement the spirit of the 51st plenary meeting of the Financial Committee of the State Council, crack down on speculation in virtual currency transactions such as Bitcoin, protect the property safety of the people, and maintain financial security and stability, the relevant departments of the People's Bank of China recently interviewed some banks and payment institutions such as Industrial and Commercial Bank of China, Agricultural Bank of China, China Construction Bank, Postal Savings Bank of China, Industrial Bank and Alipay (China) Network Technology Co., Ltd. regarding the issue of banks and payment institutions providing services for virtual currency trading speculation.

The relevant departments of the People's Bank of China pointed out that virtual currency trading speculation activities disrupt the normal order of the economy and finance, breed risks of illegal cross-border transfer of assets, money laundering and other illegal and criminal activities, and seriously infringe on the property safety of the people. All banks and payment institutions must strictly implement the "Notice on Preventing Bitcoin Risks" and "Announcement on Preventing Token Issuance and Financing Risks" and other regulatory provisions, earnestly fulfill customer identity identification obligations, and shall not provide account opening, registration, trading, clearing, settlement and other products or services for related activities. All institutions should comprehensively investigate and identify the capital accounts of virtual currency exchanges and over-the-counter dealers, and promptly cut off the transaction capital payment link; analyze the capital transaction characteristics of virtual currency trading speculation activities, increase technical investment, improve abnormal transaction monitoring models, and effectively improve monitoring and identification capabilities; improve internal working mechanisms, clarify division of labor, consolidate responsibilities, and ensure that relevant monitoring and disposal measures are implemented in place.

On the same day that the above news was released on the official website of the central bank, the Industrial and Commercial Bank of China, the Agricultural Bank of China, the China Construction Bank, the Postal Savings Bank of China, and the Industrial Bank responded positively and issued announcements one after another, stating that they would resolutely not conduct or participate in virtual currency-related business activities, further increase the intensity of investigation and disposal, and take strict measures to resolutely cut off the funding payment links for virtual currency trading speculation activities.

In addition, the reporter noticed that while cracking down on virtual currencies, the withdrawal of mining projects is also underway. Recently, the Development and Reform Commission of the Inner Mongolia Autonomous Region issued the "Eight Measures on Resolutely Cracking Down on and Punishing Virtual Currency "Mining" Behavior (Draft for Comments)" and solicited public opinions. The Sichuan Provincial Development and Reform Commission and the Energy Bureau required that the 26 virtual currency "mining" projects that the State Grid Sichuan Electric Power Company had investigated and reported be completed by June 20. At the same time, it was required that power generation enterprises conduct self-inspection and self-correction, and that a comprehensive cleanup and investigation be carried out, and that the self-inspection, cleanup and rectification and cleanup and closure be reported before June 25.

"Under the precise crackdown by relevant government departments, the currency and blockchain circles are in a state of extreme polarity. On the one hand, blockchain, as a new digital technology that subverts tradition, has promising development prospects; on the other hand, the currency and mining businesses are in a state of panic, feeling that the end is near." said Zhou Jie, deputy general manager of Zhengda Information Technology Co., Ltd.

He said that looking back, the development of virtual currency in China can be described as ups and downs. At first, many places were tolerant of virtual currency transactions. With the endorsement of many Internet celebrities and the promotion of many self-media, various capitals flocked in. Just by giving eye-catching names such as dog coins, cat coins, shit coins, tender model coins, barbecue coins, etc., you can create waves of "cryptocurrency circle wealth myths" that will stun the world. On September 4, 2017, the central bank and seven other departments jointly issued the "Announcement on Preventing the Risks of Token Issuance and Financing", which clearly required that all token issuance and financing activities in China be stopped from now on. Many virtual currency trading venues in China have "left their hometowns" and moved their bases overseas to start a new business. In August 2020, the People's Bank of China launched a pilot project for the digital RMB in some areas, so a search engine immediately recommended "The People's Bank of China issues digital currency-click to enter the top ten digital currency trading platforms".

"Facts have proved that not allowing the issuance and speculation of coins cannot completely eliminate the circulation and speculation of virtual currencies." Zhou Jie said that every wave of speculation in virtual currencies equates itself with the state-supported blockchain technology and the digital RMB issued by the People's Bank of China. He hopes that the state's ban on providing financial settlement for virtual currencies will be a strong medicine that can make those who are deeply involved in it wake up.