Post-Bitcoin Era: Electronic Currency Regulation on the Agenda

     The U.S. Commodity Futures Trading Commission (CFTC) recently defined Bitcoin and other virtual currencies as commodities for the first time and announced that it would regulate Bitcoin futures and options trading. Not long after, the CFTC punished a Bitcoin swap trading platform called TerraTrade for allegedly using the Bitcoin trading platform to launder money.

Coincidentally, the Joint Conference of State Banking Supervisors in the United States recently suggested that companies that have third-party transactions or transfers with electronic money should be included in the responsibilities of state banking regulators. Although it is still at the suggestion stage, it will advance the process of regulating electronic money economic activities.

The change in the regulatory attitude has a dual impact on the Bitcoin market, which has experienced many ups and downs. On the one hand, various illegal speculation and speculative money laundering activities using Bitcoin will gradually usher in stricter "multiple supervision". In fact, compared with transactions around Bitcoin itself, various derivatives and structured products developed based on Bitcoin are more risky, which is why Bitcoin is classified as a commodity. On the other hand, in a standardized development environment, Bitcoin may gradually get rid of the "bad boy" image and evolve into a stable choice for a modern financial product portfolio.

We have entered the "post-Bitcoin era", moving away from ups and downs, joys and sorrows, and moving towards rationality and norms, which has become the mainstream of Bitcoin development. In fact, the innovative value of Bitcoin is more reflected in the blockchain technology behind it. This is a string of data blocks generated by cryptographic methods. Each data block contains information about all Bitcoin network transactions in the past 10 minutes, which is used to verify the validity of its information and generate data blocks. Blockchain provides a decentralized attempt and provides a way to re-establish information verification and credit construction for various industries, including finance. This technology has recently received more and more attention from the traditional financial industry. For example, according to the latest report of the European Banking Association (EBA), blockchain technology has the potential to reduce costs, increase product supply and increase speed.

Although some people think that Bitcoin and its blockchain technology are not stable enough, the revolutionary changes it has brought to payment cannot be ignored. The root cause is that the development of the Internet and new technologies has led to the expansion of distributed payment and clearing mechanisms, which in turn may promote innovation in distributed financial transactions. Even the relatively "stable" Federal Reserve issued a report in early 2015 saying that it would create conditions to facilitate direct clearing of public IP networks between financial institutions, as this is more likely to reduce costs.

In the "post-Bitcoin era", although many virtual currencies are not close to the real currency attributes, on a relatively stable development path, by exploring the currency functions centered on payment and settlement, it is helpful to explore real electronic currency innovation. However, innovation must be followed by supervision.