Bitcoin is in chaos due to fake orders, and anti-money laundering supervision guidelines are soliciting opinions

Zhou Xuedong, deputy to the National People's Congress and director of the Business Management Department of the People's Bank of China:

Bitcoin has a "brushing" problem

Anti-money laundering supervision guidelines are being solicited for comments

■ Zhang Xin, reporter of the two sessions of this newspaper

"Bitcoin bubbles and risks are indeed relatively large." Zhou Xuedong, deputy to the National People's Congress and director of the Business Management Department of the People's Bank of China, said in response to a question from a reporter from Securities Daily on the morning of March 13, "We and relevant departments are studying measures to strengthen the supervision of Bitcoin, and various departments will successively issue relevant regulations from different supervision angles. For example, in terms of anti-money laundering, regulatory guidelines will be introduced as soon as possible, and opinions have been sought from Bitcoin trading platforms."

Zhou Xuedong introduced, "According to the deployment of the People's Bank of China, we have been conducting continuous on-site inspections of Bitcoin trading platforms since early January this year. In the past two months, we have found many problems, and there are two aspects that are more prominent: First, some institutions are suspected of illegally engaging in financial business, including financing and currency lending, continuous trading, centralized matching, etc. Second, these institutions have basically not established internal control systems and measures for anti-money laundering. The use of Bitcoin for money laundering and evading foreign exchange controls does exist, but the number is not large."

"What needs attention is that the bubble in the trading of online virtual commodities such as Bitcoin is very large. In January this year, the price of Bitcoin soared, and China's Bitcoin trading volume once accounted for 99% of the world's total. In fact, the actual trading volume is not particularly large. It is mainly because some institutions and investors use high-frequency trading to do "counter-trading", that is, to create false transactions and increase business volume by brushing orders. This may be because some PE and venture capitalists hope to increase their market share and attract investors' attention and investment. Therefore, it is necessary to inspect and regulate Bitcoin." Zhou Xuedong emphasized.

In addition, Zhou Xuedong clarified the market misunderstanding and said, "Currently, Bitcoin trading platforms are often mistaken for exchanges, but there is a fundamental difference between the two. Current Bitcoin trading platforms do not have corresponding financial licenses and cannot be called exchanges. In addition, Bitcoin is a virtual commodity on the Internet, not a currency, and is also fundamentally different from the digital currency that the central bank is studying."

Zhou Xuedong suggested that in the short term, it is necessary to clarify the regulatory bottom line of Bitcoin trading platforms, establish a negative list, and do a good job in risk prevention and mitigation. For example, leveraged trading, financing and currency lending are not allowed, and the use of free transaction fees to push up trading volume and manipulate trading prices is not allowed. It is not allowed to violate anti-money laundering regulations or participate in money laundering, it is not allowed to violate foreign exchange management regulations, it is not allowed to use Bitcoin instead of legal currency for payment and settlement, it is not allowed to evade taxes, it is not allowed to carry out false propaganda or illegal pyramid selling, and it is not allowed to carry out securities, futures and other financial businesses in violation of regulations.

Zhou Xuedong believes that in the long run, Bitcoin must be included in the scope of supervision of commodity trading platforms managed by local governments, and the local financial bureaus will implement the main body supervision or institutional supervision; the People's Bank of China branches, securities regulatory bureaus, insurance regulatory bureaus, industrial and commercial bureaus, tax bureaus, etc. will implement functional supervision; the People's Bank of China Business Management Department will implement functional supervision from the perspectives of payment settlement, account management, anti-money laundering, and foreign exchange management. In short, we should be tolerant of innovation and prudently observe Bitcoin and other trading platforms, but it is definitely not okay to ignore them.

In addition to focusing on Bitcoin regulation, Zhou Xuedong also proposed a motion to amend the "People's Bank of China Law", suggesting that the content of the People's Bank of China's macro-prudential regulatory framework be clarified, "such as establishing a counter-cyclical capital regulatory plan, implementing prudent supervision of systemically important financial institutions, etc. At the same time, it should be made clear that the People's Bank of China can formulate standards and scope for systemically important financial institutions. In addition, the "People's Bank of China Law" should clearly grant the People's Bank of China the responsibility to assess and inspect financial stability matters, clarify the People's Bank of China's responsibility to prevent and resolve systemic risks, and assess the recovery and disposal plans of systemically important financial institutions. If problems are found, they may be required to rectify them within a time limit; if the circumstances are serious, prudential regulatory measures may be taken alone or in conjunction with relevant regulatory authorities."