Regulators: All Bitcoin trading platforms will be shut down and will exit the market in the near future

On September 14, a reporter from China Business News exclusively learned from a regulator close to the local Internet Finance Regulation Office that the regulator has made a final decision on domestic Bitcoin trading platforms: "All of them will be shut down and exit the market in the near future."

On the evening of September 13, the China Internet Finance Association (hereinafter referred to as "China Internet Finance Association") issued a risk warning, saying that all kinds of so-called "currency" trading platforms have no legal basis for establishment in my country. It also stated that so-called "virtual currencies" such as Bitcoin are increasingly becoming tools for illegal and criminal activities such as money laundering, drug trafficking, smuggling, and illegal fundraising. Investors should remain vigilant and report any clues of illegal and criminal activities immediately.

Recently, local regulatory authorities have stepped up their investigations into virtual currency trading platforms such as Bitcoin. The Beijing Financial Work Bureau held a meeting in early September, requiring token issuance and financing trading platforms and virtual currency trading platforms to conduct a comprehensive cleanup and rectification.

In fact, regulators have been focusing on Bitcoin platforms since the beginning of this year. On January 6, the Beijing Operations Management Department of the People's Bank of China and the Shanghai Headquarters of the Central Bank interviewed the heads of major domestic Bitcoin trading platforms. Subsequently, a joint inspection team was formed to conduct on-site investigations.

On January 18, the central bank released the results of its investigation, showing that several major trading platforms had violated regulations to varying degrees. Bitcoin China had problems such as operating beyond its scope, illegally carrying out margin trading, and failing to implement third-party custody of investors' funds; Okcoin and Huobi.com illegally carried out margin trading, leading to abnormal market fluctuations. In addition, these platforms failed to establish relevant anti-money laundering internal control systems in accordance with regulations.

In a risk warning on the evening of the 13th, the China Internet Finance Association pointed out that in recent years, so-called "virtual currencies" such as Bitcoin, Litecoin and various tokens have been traded in a centralized manner on some Internet platforms. The number of people involved has gradually increased, and the financial and social risks created cannot be ignored.

The so-called "virtual currencies" such as Bitcoin lack a clear value basis, the market is full of speculation, and prices fluctuate violently. Investors blindly follow the trend and speculate, which can easily lead to financial losses. Investors need to strengthen their awareness of risk prevention.

It is worth noting that so-called "virtual currencies" such as Bitcoin are increasingly becoming tools for illegal and criminal activities such as money laundering, drug trafficking, smuggling, and illegal fundraising. Investors should remain vigilant and report any clues of illegal and criminal activities immediately.

The risk warning also emphasizes that investors who participate in speculation through trading platforms of so-called "virtual currencies" such as Bitcoin face risks of large price fluctuations, security risks, etc., and the platform technology risks are also high. There have been many cases of trading platforms being hacked and stolen internationally, and investors must bear the investment risks themselves. Criminals often use trading platforms to obtain so-called "virtual currencies" to engage in related illegal activities, which poses great legal risks. Recently, a large number of trading platforms have been stopped by regulatory authorities for supporting token issuance and financing activities (ICO). There is no legal basis for the establishment of various so-called "currency" trading platforms in my country.

The China Internet Finance Association also called on all member units to fulfill the commitments of the industry self-discipline convention, strictly abide by national laws and regulatory requirements, not participate in any centralized transactions related to so-called "virtual currencies" or provide services for such transactions, and actively resist any illegal and irregular financial activities.

It is worth noting that the General Office of the State Council also issued opinions on improving the regulatory system and mechanism for anti-money laundering, anti-terrorist financing, and anti-tax evasion on the 13th. It is proposed that by 2020, a preliminary "three anti" legal and regulatory system will be formed that adapts to the requirements of the socialist market economy, suits China's national conditions, and meets international standards, and a "three anti" regulatory coordination and cooperation mechanism with clear responsibilities, equal rights and responsibilities, and strong cooperation will be established to effectively prevent and control the risks of money laundering, terrorist financing, and tax evasion.

Bitcoin trading activities are mainly carried out in China. At the beginning of this year, the trading volume of only three domestic platforms, namely BTC China, Okcoin and Huobi, accounted for 98% of the global total. After the intervention of regulators, the trading volume in China has dropped significantly, but it is still at a high level. As of 14:30 on September 14, according to the foreign website bitcoinity.org, Okcoin's trading volume ranked second in the world, accounting for 12.45%, and BTC China accounted for 10.64%, ranking third.

As early as August 30, the China Internet Finance Association issued a risk warning for ICOs. On September 4, the central bank announced that it would classify ICOs as illegal financial activities and suspend all domestic transactions.

According to the "Announcement on Preventing the Risks of Token Issuance and Financing" jointly issued by the People's Bank of China and seven other ministries and commissions, any so-called token financing trading platform shall not engage in the exchange business between legal currency and tokens or "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".

"Although this policy is aimed at ICO, its characterization of virtual currencies such as Bitcoin can be seen from it." A person close to the regulator told the First Financial reporter.

Recently, other countries have also tightened their supervision on ICO and virtual currency investment activities. On September 12, the UK Financial Conduct Authority (FCA) issued a warning on the risks of ICO and digital currencies. The FCA said that ICO is a high-risk and highly speculative investment activity. This is not the first time that the FCA has issued a risk warning on virtual currencies such as Bitcoin.

Recently, there have been media reports that regulatory authorities have decided to close virtual currency exchanges in China.

At present, a third-party trading platform in China, Guojiao.com, has suspended all currency transactions. So far, the three major domestic platforms, Okcion, Huobi.com, and Bitcoin China, have responded that they have not received any relevant notice. Okcoin also said that if the report is true, it can be transformed into an information platform for peer-to-peer transactions of digital assets.