Is 2017 the first year for Bitcoin regulation?

The monkey goes down the mountain, and the golden rooster hits his waist

The Chinese New Year is coming soon, but this year may not be easy for Bitcoin investors. A black swan appeared at the end of the year, the domestic Bitcoin bubble was burst, and investors were horrified.

Bitcoin's performance in recent times is very much like a zodiac play, with it jumping up and down in the Year of the Monkey and crowing at the dawn in the Year of the Rooster.

In 2016, Bitcoin first rose by 160% like a monkey climbing a tree. Just after the New Year's Day in 2017, the price of Bitcoin exceeded $1,000 per coin, and on January 5, it hit a new all-time high of $1,249 per coin. But on January 6, Bitcoin staged another monkey descending from the mountain, with a "flash crash" in price, which plummeted by more than 30%, to a minimum of $730.25 per coin.

The so-called rooster crowing at the dawn refers to the fact that the regulatory authorities in Shanghai and Beijing of the central bank interviewed the heads of the three major domestic Bitcoin trading platforms in early January. On January 11, after the joint investigation team led by the central bank entered the three major domestic Bitcoin trading platforms for on-site inspections, the central bank issued another announcement naming the three major domestic Bitcoin trading platforms. The central bank's move is intended to sound the alarm for major trading platforms to avoid risks and protect the legitimate interests of game players.

The hand of supervision grabs the tail

Later on January 18, the Business Management Department of the Central Bank announced that since the joint investigation team entered some Bitcoin trading platforms, it was initially found that these Bitcoin trading platforms violated regulations in conducting margin trading and securities lending business, resulting in abnormal market fluctuations. In addition, these platforms have not established relevant anti-money laundering internal control systems in accordance with regulations. This is the central bank's direct action to catch the tail of Bitcoin trading platforms to warn them.

Although some regulatory authorities have publicly expressed concerns about Bitcoin regulation before, this is the first time that they have taken direct regulatory measures. Although I dare not say that this is the first year of Bitcoin regulation, Bitcoin regulation has begun.

Regarding the central bank’s entry, the editor of China Electronic Banking Network consulted a staff member of a trading platform on January 24, and the other party said that the central bank’s people should have evacuated, and no relevant personnel were seen entering or leaving the company since the day before yesterday (January 22). On January 23, the three major domestic Bitcoin trading platforms each issued an announcement on their official website, saying that in order to further curb speculation and prevent drastic price fluctuations, they would start charging transaction service fees for Bitcoin and Litecoin transactions from 12:00 on January 24, 2017. The specific adjustments are: transaction service fees are charged in a fixed ratio in both directions, RMB for selling, and Bitcoin or Litecoin for buying; the active and passive transaction fee rates are the same; the service fee is charged at a fixed rate of 0.2% of the transaction amount.

Obviously, this two-way charging can effectively reduce the number of high-frequency transactions on the platform, which can reduce risks to a certain extent. But charging is just the beginning.

Because the birth and development of Bitcoin, and even its price, are not protected by the laws of any country, and its powerful function of "any currency for Bitcoin, Bitcoin for any currency" has always made it suspected of "money laundering". And this suspicion is difficult to correct directly through itself or the law. This makes the rapid development of Bitcoin itself embarrassing, and the risks are gradually increasing.

Therefore, if Bitcoin is to continue to survive, there must be more constructive guidance and regulations on Bitcoin.

"Do whatever you want without breaking the rules" may be the highest pursuit

Because Bitcoin was born and grew without any legitimate regulatory agency involved in its “birth” and “education,” it is actually similar to the monkey that popped out of a stone in Journey to the West. It was harmless at first, but its energy grew so strong that the heaven and earth shook.

If we want Bitcoin to develop rapidly, the biggest difficulty is how to make this "monkey" learn its lesson, become useful, and do what it wants without breaking the rules. What we mean by what we want is that Bitcoin must constantly optimize itself and find ways to make all countries at least recognize Bitcoin as a legal property to indicate its legal identity, so as to ensure the fundamental development of Bitcoin. Of course, we should not expect Bitcoin to become a legal currency at all.

The last time the central bank pruned the Bitcoin trading platform, it charged a fee. Investors may complain about this move, but the central bank's real intention is to avoid greater investment risks and protect the long-term interests of game participants.

The topic of "money laundering" is a problem that Bitcoin trading platforms cannot escape, and it is also a very serious problem. If this problem is not solved, the legitimacy of Bitcoin will always be in doubt, and the sword of Damocles will always hang over their heads.

Previously, at a product launch conference attended by the editor of China Electronic Banking Network, the person in charge of a Bitcoin trading platform said that regarding money laundering, the platform is also working hard with the regulatory authorities to discuss countermeasures. I hope that there will be reliable countermeasures as soon as possible, so that everyone will be a calm player on the platform.

If 2017 is the first year of Bitcoin regulation, then the next year may be a crucial year for Bitcoin’s survival.