|
In the process of development, Bitcoin has not made any breakthrough in its currency attribute application. However, due to its innovative and scarce characteristics, it has great room for imagination, so it is used as a subject matter for market transactions. Due to the excessive price fluctuations in buying and selling, a situation of capital speculation has been formed. The central bank took action at this time, first of all, to protect the interests of investors; secondly, the financial business such as financing and currency lending of exchanges is indeed illegal; thirdly, to prevent exchanges from money laundering; and finally, to prevent exchanges from violating financial laws and regulations such as foreign exchange management and payment settlement. "Bitcoin has recently played the news market again: China's central bank interviewed small exchanges, which led to price surges. The price fell by 600 yuan, and rebounded by 700 yuan after the Philippines recognized the status of Bitcoin. The price fell by 300 yuan after Huobi announced that it would increase the review of investor funds. Then Huobi and OKCoin issued an announcement to suspend Bitcoin withdrawals for one month, and the recharge and withdrawal of RMB was not affected, and fell by another 200 yuan. The market was full of fear, and 4 pieces of news came out in two days. The price of the currency fluctuated by 2,000 yuan in total. Do players who frequently operate feel that they are being harvested back and forth and playing with fake Bitcoin? "Recently, Wang Juncheng, a senior Bitcoin analyst, expressed his feelings on Weibo, accurately describing the turbulent market of Bitcoin after the Spring Festival.
The Economic Daily reporter found that since the record high of 8,896 yuan at the beginning of the year, Bitcoin trading platforms have entered the field of vision of regulatory authorities, and trading rules have also changed significantly. On January 6, the central bank interviewed the three major Bitcoin trading platforms, Huobi, OKCoin, and Bitcoin China, and launched an on-site investigation of the three platforms on January 11; on January 18, the central bank announced the first batch of inspection results, publicizing that Bitcoin China exceeded its scope of operation and violated regulations in the allocation of funds, and OKCoin and Huobi did not establish an anti-money laundering system in accordance with regulations. The three major platforms immediately shut down their financing and currency lending businesses; on January 24, the three major platforms imposed a transaction service fee of 0.2% of the transaction amount, and the era of free domestic Bitcoin transactions ended; on February 8, the central bank expanded the scope of the investigation and interviewed 9 small trading platforms; on February 9, the central bank warned that Bitcoin trading platforms that violated serious regulations would be shut down and banned according to law. That night, the three major trading platforms issued an announcement to suspend Bitcoin and Litecoin withdrawals.
At present, the investigation of the central bank is still ongoing. Affected by the introduction of handling fees, the cleanup of margin trading, and the restriction of currency withdrawal, the maximum fluctuation of Bitcoin price this year is as high as 45%. As of press time, the price of Bitcoin is hitting the 8,000 yuan mark. The hot Bitcoin is back in the market...
What is "coin"?
Since its birth in 2009, Bitcoin has experienced both glory and trough, but to this day, countries still have different views on the characterization of Bitcoin. The "Notice on Preventing Bitcoin Risks" issued by the People's Bank of China and five other ministries and commissions defines it as a specific virtual commodity; the U.S. Commodity Futures Trading Commission defines Bitcoin as a commodity; the UK Customs and Excise Department believes that Bitcoin is a currency; the Philippines recognizes Bitcoin as a payment system; but Sweden and Germany insist that Bitcoin is a commodity rather than a currency... Overall, countries have not yet reached a consensus on the characterization of Bitcoin, but most governments do not recognize Bitcoin as a currency, but define Bitcoin as a commodity.
"As for the design of Bitcoin itself, it is a decentralized virtual digital currency based on P2P and cryptography with a total limit of 21 million, which is used to meet payment, settlement and other needs." According to Xiao Lei, chief analyst of Golden Wallet, on the Internet, Bitcoin is just a string of code. Without the need for banks and various payment institutions, Bitcoin can record all transactions and does not require any government or central bank to endorse its credit.
"However, in practice in various countries, Bitcoin has not formed the ideal currency function, but has always played the role of a financial asset." Li Aijun, dean of the Internet Financial Law Institute of China University of Political Science and Law, said that in the modern monetary system, currency is issued by the monetary authorities of various governments, while Bitcoin is neither issued by the monetary authorities nor backed by corresponding physical assets, nor does it have monetary attributes such as legal compensation and compulsion, so it is not a currency. "Currency issuance has the nature of national sovereignty. Even if electronic currency is promoted, each country will be dominated by the state. If digital currency does not use independent technology, it will have major risks. Therefore, there is no possibility of using Bitcoin as electronic currency." Li Aijun said.
From the above, it is not difficult to find that Bitcoin was designed to break through the existing monetary system and become a decentralized free currency. However, in the process of development, the application of currency attributes has not been broken through, but because of its innovative and scarce characteristics, it has huge imagination space, so it is used as a subject matter for market transactions. Due to the excessive price fluctuations in buying and selling, a situation of capital speculation has been formed. Therefore, if Bitcoin is described in one sentence, it is a speculative product with currency ideals.
Why is it popular again? In 2016, Bitcoin rose by 130% throughout the year, becoming the most profitable asset in the world. Industry insiders believe that the risk aversion demand caused by the depreciation of the RMB, the investment demand caused by the blocked investment channels, the demand for speculation, and the demand for currency exchange under foreign exchange controls have become the logical support for the Bitcoin "bull market".
"Since most of the global Bitcoin transactions are completed in my country, changes in the Chinese market have a greater impact on Bitcoin prices." Xiao Lei said that since the RMB exchange rate reform on August 11, 2015, the RMB exchange rate against the US dollar has shown a clear depreciation trend, and the start of Bitcoin prices also began at that time. Wang Juncheng also believes that as the RMB exchange rate against the US dollar continues to fall, in order to resist the risk of RMB depreciation, the traditional way is to buy gold for risk hedging, and Bitcoin has the same scarcity and risk hedging properties as gold, so it has been hotly pursued by funds.
According to Xiao Lei, Bitcoin has not been popular in the international market because most developed countries have smooth investment channels, but domestic investment channels are relatively narrow, which easily leads to funds chasing various niche assets. "With the strengthening of my country's exchange rate stabilization measures and stricter control of cross-border capital flows, investors' concerns about the capital market and real estate market have intensified. Some of the funds with nowhere to go have begun to enter the alternative asset market. Recently, the funds flowing into the gold, Bitcoin and other markets have increased significantly." Xiao Lei said.
From a purely speculative perspective, Bitcoin is traded 24 hours a day, and its volatility far exceeds that of financial speculation targets such as stocks and foreign exchange. Its surge history and future prospects are better than those of physical speculation targets such as stamps and coins, thus attracting a large amount of hot money to participate in speculation.
In addition, the country has recently introduced policies to prevent capital outflows, and many people have used Bitcoin as a tool to circumvent regulation. Wang Juncheng said that Bitcoin can bypass regulation and achieve borderless capital circulation. The specific operation method is to buy Bitcoin with RMB on domestic platforms, remit Bitcoin to foreign platforms, and sell Bitcoin on foreign platforms for US dollars. Therefore, under the conditions of RMB depreciation expectations and limited exchange quotas, Bitcoin is likely to become a backdoor to foreign exchange regulation, and be chased by funds, thereby pushing up the price of the currency.
How to regulate? It is not difficult to see from the frequent investigations of Bitcoin trading platforms by the central bank this year that Bitcoin is in big trouble this time. But why did the central bank choose to launch the investigation in early 2017 instead of intervening earlier?
"The central bank's supervision of financial behavior generally follows three standards. First, it violates prohibitive legal provisions and generates financial risks. Second, it may generate systemic financial risks and affect social stability. Third, it may infringe on citizens' property rights." Li Aijun said that the market trading price of Bitcoin had been relatively stable for a long time before, but the price fluctuations from last year to the beginning of this year were the direct cause of the central bank's action. Since some Bitcoin trading platforms were unable to log in recently when the market skyrocketed or plummeted, investors suffered heavy losses. Therefore, it is the correct regulatory logic to respond to problems as they arise.
In Xiao Lei's view, the central bank has two purposes for this round of investigation. First, as the price of Bitcoin continues to rise, a lot of funds have begun to chase Bitcoin, and even grandpa and aunt have rushed into the market, and various scams under the banner of Bitcoin have occurred frequently; second, many half-understood analyses have magnified the function of Bitcoin in transferring assets and laundering money, causing great pressure on the central bank and other regulatory authorities, and they have to start inspections.
"The central bank is taking action at this time, first of all, to protect the interests of investors; secondly, the exchange's financial operations such as financing and currency lending are indeed illegal; thirdly, to prevent the exchange from money laundering activities; and finally, to prevent the exchange from violating financial laws and regulations such as foreign exchange management and payment settlement." Wang Juncheng said.
Bitcoin transactions are free, so it is impossible to impose rigid controls on investors, but regulation of trading platforms is necessary. Regulatory authorities should make trading platforms a tool for regulating Bitcoin, but they should also strike a balance to prevent over-strict regulation, which would force Bitcoin to go underground. Wang Juncheng suggested that in order to protect the interests of investors, first, the funds of the exchange need to be managed by a third-party platform to prevent the exchange from misappropriating customer funds; second, in order to prevent the possibility of illegal money laundering, currency exchange, and pyramid selling activities through Bitcoin, the exchange should strengthen customer identification, strengthen the review of fund sources and withdrawals, and set an annual withdrawal limit like the 50,000 US dollar foreign exchange limit; third, since the current path for cross-border fund transfers of Bitcoin is mostly over-the-counter transactions, regulatory authorities also need to increase over-the-counter transaction monitoring. |
