What is the future of Bitcoin trading platform regulation?

A recent report has attracted everyone's attention: "The Financial System Committee of the Financial Services Agency of Japan is perfecting the final version of the draft, which will be submitted to the national legislature, the Congress, next year once completed. The draft proposes to set a series of financial conditions that virtual currency trading operators must meet, such as a certain amount of operating funds, and requires exchanges to manage their own corporate assets separately from customer assets. In addition, it requires the introduction of mandatory measures, and the asset management and financial statements of the exchange must be subject to strict external inspections by certified public accountants or auditing firms."

Currently, virtual currencies are divided into three categories

The first category: virtual currency in games.

This is not unfamiliar to many game-addicted players. In the era of single-player games, currency was accumulated in a certain way and used to purchase equipment, but these virtual game currencies could only be used in the game. With the development of some portal websites and communities on the Internet and the realization of game interconnection, virtual game currencies have their own "financial market". Players can trade game currencies and obtain certain benefits.

The second category: special currencies issued by portals and some other website service providers

The currency issued by the service provider is generally used to purchase services on this website. The currency we know and come into contact with the most is Tencent's Q Coin, which is mainly used to purchase value-added services.

Category 3: Virtual Currency on the Internet

This category is the virtual currency we focus on, mainly Bitcoin (BTC) and Litecoin (LTC). Bitcoin is an electronic currency generated by open source P2P software and a network virtual currency. It is mainly used for Internet financial investment and can also be used directly in life as a new currency.

Bitcoin was proposed by Satoshi Nakamoto in 2009. Peer-to-peer transmission means a decentralized payment system. Bitcoin can be exchanged for the currencies of most countries. Users can use Bitcoin to purchase some virtual items, such as clothes, hats, equipment, etc. in online games. As long as someone accepts it, Bitcoin can also be used to purchase items in real life. Unlike most currencies, Bitcoin does not rely on a specific monetary institution to issue it. It is generated through a large amount of calculations based on a specific algorithm. The biggest difference between Bitcoin and other virtual currencies is that the currency in the system has reached 1500万个, and its total number will only be 21 million.

The regulation of Bitcoin transactions has always been a topic of research and discussion. In some developed Western countries, there are corresponding regulatory mechanisms for Bitcoin, but for developing countries with conservative economies, the rights and interests of many traders or Bitcoin enthusiasts are not protected by any law, and there is no guarantee of their rights and interests. Today, Japan will also implement a management mechanism for Bitcoin trading platforms, which may give us some thoughts on future regulation.

Background on Japan's upcoming regulation of Bitcoin trading platforms

Mt.Gox, headquartered in Tokyo, Japan, started to participate in Bitcoin trading as early as 2010. It was one of the earliest platforms to participate in this business and occupied one of the three industry representatives on the board of directors of the Bitcoin Foundation. Due to its early participation and few competitors, Mt.Gox has achieved rapid development and became the world's largest Bitcoin trading platform, accounting for 80% of the global Bitcoin trading volume. Later, due to various reasons, the trading platform collapsed. The executives of the trading platform did whatever they wanted, embezzled assets, and users lost all their assets, causing huge market losses and extremely bad impacts. The incident is currently in the prosecution stage. After this incident, Japan also explored the Bitcoin regulatory legislation mechanism in its efforts and helplessness.

Current status of domestic regulatory mechanisms

At present, many so-called traders and trading platforms in China just register an unregistered website and start to advertise and recruit customers without any supervision. Some Bitcoin trading websites that have run away are almost all operated in this way. Common characteristics of runaway platforms: incomplete registration, direct purchase on the website, relatively simple platform, short operation time of 3-6 months, more speculative psychology, on the contrary, the greater the price paid by the platform, the less likely it is to run away.

At present, relevant departments will only intervene and supervise when the trading platform suffers economic losses or anti-money laundering. However, there is no regulatory mechanism for financial commercial activities. The regulatory mechanism is blank in China, and the relationship between users and trading platforms is completely based on trust.

Why don’t national governments intervene and regulate virtual currencies?

Bitcoin has both mature regulatory mechanisms and a legitimate status in the United States, Singapore, Europe, the United Kingdom, and Germany, but in Asia, Bitcoin is considered to be just a virtual currency, so there is no clear regulatory mechanism yet.

1. Problems of understanding . Bitcoin was born in the United States and its development is also mysterious. It was once the mainstream economy. Bitcoin is a huge challenge to governments around the world. The United States also developed in doubt at the beginning. The United States recognizes Bitcoin, and the financial community also recognizes and has an open attitude. Asia is relatively conservative in finance, but more supportive and recognized for industry. On the one hand, it is due to the national conditions of developing countries. Perhaps the real reason is that they don’t know how to treat Bitcoin in a more correct and appropriate way. Comprehensively observing, the domestic attitude is still mainly wait-and-see. Perhaps in the future, as the Bitcoin regulatory mechanism in some developed countries in the United States continues to improve and mature, we will also learn from them.

Second, the economic group is small . Compared with the overall economic environment in China, Bitcoin is not an economic theme, but a circle culture, and is not mainstream. On the one hand, the global market value of Bitcoin is 6.8 billion US dollars, and the amount of funds is small. Compared with other economic mainstreams, it has not formed a relative scale, which is also the reason why Asian countries do not pay enough attention to it.

We can view the inevitable trend of the regulatory mechanism from the perspective of the laws of material movement. The movement of matter is directional (that is, the direction of development). Matter generates the power of movement due to the opposition of internal contradictions, and the unity of contradictions determines the direction of material movement. This direction changes according to the changes in the size of the opposing sides of the contradiction. From this perspective, it is easy for us to explain the necessity of Bitcoin regulation and the regularity of its development. When contradictions arise in the development process, some kind of force is inevitably needed to solve the problems that arise. The way and method of solving them requires everyone to think deeply based on the characteristics of things themselves, that is, Bitcoin itself, and its unique laws of development.

Japan's process from the "Mentougou" incident to the regulation of trading platforms can more or less inspire relevant domestic groups or departments to regulate domestic virtual currency exchanges. At present, China has become the world's largest Bitcoin trading market. The visible liquidity used for Bitcoin trading every day is over 100 million yuan. Do we have to wait for losses like Japan before we can do something? How to establish a sound regulatory mechanism is enough to attract the attention of everyone and relevant departments. At least at this stage, we should try to actively explore it. The regulatory mechanism is not only to better protect the rights and interests of users from loss, but also to develop virtual currency in a healthier way in my country in the future.

The birth of Bitcoin is another great creation of human society. It has no credibility endorsement from national government agencies, but is purely based on the commercial reputation behind it. It relies on the common love and trust of people for Bitcoin. The world of Bitcoin is closer to the "Utopia". At present, there is still a difference between major domestic platforms and black platforms. Formal trading platforms at least have high website security and a complete registration and filing system. The website filing status can be queried using the webmaster tool. Bitcoin is an experiment in decentralization. Coinice advocates that platforms or individuals in the currency world should be a small center, and they should be more transparent to each other. With the development of Bitcoin, we can also use the successful experience of other countries to continuously explore. As long as everyone has a common goal, the realization of the future regulatory mechanism is not far away.

Text/coinnice
Source: Babbitt Information (http://www.8btc.com/bitcoin-exchange-regulation)