Author: Xiao Lei looks at the market
Bitcoin is a very new thing for the entire world, and it may gradually spawn an emerging industry. The current classification of financial markets is mainly based on stocks, bonds, futures, insurance, banks, funds, foreign exchange, trusts, financial leasing, finance companies, pawns, etc. Internet finance has emerged in recent years, but Internet finance , mainly moving traditional financial products online, and the essence has not changed. This is not the case with Bitcoin. Just the positioning issue is not clear yet. Therefore, there are huge challenges in the supervision of Bitcoin transactions.
Judging from the development of the Chinese market, the attitude of regulators towards Bitcoin transactions is actually undergoing great changes with its development momentum and people's understanding of it. If the nature of Bitcoin cannot be well analyzed from a dynamic and rigorous logical level, it will be difficult to know the regulatory direction of Bitcoin transactions in the future.
Let me sort it out:
In 2013, the price of Bitcoin rose from 80 yuan/coin at the beginning of the year to 8,000 yuan/coin at the end of the year, an increase of up to 100 times. In order to cool down the Bitcoin trading market, the Central Bank of China and five ministries and commissions jointly On December 5, the “Notice on Preventing Bitcoin Risks” was issued. This notice was actually to prevent Bitcoin transaction risks. Generally speaking, the central bank and other five ministries and commissions were not aware of the "energy" carried by Bitcoin and the technical support behind it. Therefore, it is relatively simple to position it as a worry and warning about the nature of risks understood from a financial perspective.
According to the definition of the central bank in 2013, Bitcoin is a specific virtual commodity . The original words are: "Although Bitcoin is called "currency", because it is not issued by a monetary authority and does not have currency attributes such as legality and mandatory, it is not a currency in the true sense. From a nature point of view, Bitcoin should be a specific virtual commodity that does not have the same legal status as currency. It cannot and should not be used as currency in the market. "
There was also a problem at the time, that is, since Bitcoin is a virtual commodity, Then the central bank can only warn of risks and ban all financial institutions from participating in Bitcoin-related businesses, but cannot directly define the nature of trading Bitcoin. Therefore, in the question and answer session, the central bank gave a clear answer. Ordinary people have the freedom to participate. The original words are: "Bitcoin trading is a commodity buying and selling behavior on the Internet. Ordinary people have the right to participate at their own risk." "Freedom."
Since Bitcoin is not a currency, but a virtual commodity, and people have the freedom to participate in transactions, then Bitcoin transactions are actually classified into the transaction type of ordinary commodities, and the so-called supervision becomes the responsibility of the enterprise. Registered with the Industrial and Commercial Taxation Bureau, so as long as the trading place operates normally and does not violate relevant industrial and commercial taxation regulations, it will basically not involve regulatory issues. This has also led to the gradual emergence of more trading platforms. As long as you register an Internet information company, you can be a Bitcoin trading venue.
But by 2016, China's financial environment had undergone very big changes. Throughout 2016, the RMB exchange rate against the US dollar depreciated by more than 6.8%, and foreign exchange reserves fell by more than 310 billion US dollars. In order to curb the depreciation of the RMB and prevent the pressure of capital outflows, the central bank and the Foreign Exchange Administration need to investigate and supervise various channels. Throughout 2016, many investors were trying their best to exchange for U.S. dollars, and Bitcoin has indeed become an option for some investors to circumvent foreign exchange controls.
At the beginning of this year, the central bank entered several major domestic Bitcoin trading platforms. On January 11, the Central Bank’s Beijing Operations Department and the Central Bank’s Shanghai Headquarters simultaneously announced that they would join forces with local financial departments to form an inspection team, stationed on Huobi.com, BiBank, Bitcoin China and other platforms, to determine whether the company was operating beyond its scope and whether it was not operating within its scope. Conduct on-site inspections to carry out credit, payment, exchange and other related businesses with or without a license; whether there is any market manipulation; the implementation of the anti-money laundering system; potential financial security risks, etc.
On February 9, Huobi and BiBank successively announced the suspension of currency withdrawal services in order to comprehensively upgrade the platform’s anti-money laundering system. In fact, this itself means that the central bank is already fulfilling its supervision of the Bitcoin trading platform, because Bitcoin, as a virtual online trading variety without any physical conversion, is all based on the combination of virtual currency and legal currency . The exchange between virtual currency and virtual currency can be said to be a quasi-currency business in itself.
Since the main purpose of the entry process is to monitor the anti-money laundering issues that may be involved in Bitcoin, several major trading platforms have made corresponding adjustments in anti-money laundering and adopted a higher level for account opening involving RMB business. Authentication, such as holding photos such as ID cards, recording videos, etc.
If not much happens in the Bitcoin market, maybe after this round of inspections, the Bitcoin exchange will still remain and continue to observe. However, the development of the blockchain market has disrupted the balance of the entire market. If Bitcoin is a very outstanding application of blockchain technology , then the blockchain technology will certainly not stop at Bitcoin. Since the beginning of the year, the business of the blockchain market ICO (initial token issuance) has grown explosively, and its market impact is growing.
In fact, without the madness of this round of ICO, the Bitcoin trading market would be within a relatively controllable range. In addition, the RMB exchange rate has continued to rise this year, foreign exchange reserves have continued to increase, and the pressure on capital outflows at the central bank level has been reduced. If the platform is strict By adhering to red lines such as anti-money laundering, the Bitcoin platform is less likely to be shut down.
The rise of ICO has caused important changes in the direction of supervision, and the pressure of public opinion is increasing. At a time when the country is adjusting its value orientation, it hopes to guide the society to do things in a down-to-earth manner and serve the real economy. The overnight wealth brought by ICO, It completely goes against the values guidance wishes of China’s top leaders. The reality is that even Wang Sicong no longer dares to show off his wealth on Weibo. From a regulatory perspective, how can it be possible for ICOs to continue to create the myth of wealth with great fanfare.
Especially in the United States, after defining ICO as an act of issuing securities, ICO has become more controversial in the country. Therefore, ICO may bring about strict supervision in every aspect. It can be said that the question of whether to include supervision has actually become a question of having to regulate.
On September 4, the central bank, together with seven ministries and commissions, issued an announcement on preventing the risks of in the issuance of tokens. Regarding this announcement, I have explained it in detail in my previous article (Xiao Lei: Interpretation of the central bank's ICO regulatory documents item by item and its impact on trading platforms, investors, etc.) and will not elaborate further. But there are a few points that require special attention.
First of all, compared with the one at the end of 2013, this announcement defines Bitcoin and Ethereum as "virtual currencies" rather than "virtual commodities". This is a very important change. It shows that after several years of development, if Bitcoin is only defined as "virtual commodities", it may be difficult to characterize it in terms of supervision. Moreover, judging from the development trend of the entire Bitcoin market, it is not There is no development towards a simple “virtual commodity”.
Secondly, this announcement also emphasizes that tokens or "virtual currencies" used in token issuance financing are not issued by monetary authorities, do not have monetary attributes such as legal compensation and compulsory nature, do not have the same legal status as currency, and cannot It should not be used as currency in the market. This is basically consistent with the Bitcoin trading risk warning document at the end of 2013.
In other words, from the central bank level, Bitcoin is still not defined as a currency, but it has also overturned the definition of "virtual goods" at the end of 2013. To be precise, the current definition of Bitcoin by the Central Bank has been revised to "virtual currency", but please note that virtual currency is a very difficult term to define. At present, the Central Bank only does not recognize virtual currency as legal tender, but has conceptually accepted it. The term virtual currency.
Next, let me talk about the key points:
The central bank’s announcement defines ICO as the act of issuing securities. So in the future, ICO issues will definitely need to be regulated by the China Securities Regulatory Commission. But the problem is that for the China Securities Regulatory Commission, there is not much room for discussion or maneuver on the ICO issue. This can be seen from interviews with regulators such as Caixin. Moreover, the announcement on September 4th made it very clear that “no organization or individual may illegally engage in token issuance and financing activities.” In other words, the supervision of ICOs is one-size-fits-all and all are prohibited.
Let’s go back to the issue of Bitcoin exchanges. In fact, it has a strong logical relationship with the supervision of ICO. If Bitcoin trading is defined as a securities transaction, it is understandable for the China Securities Regulatory Commission to supervise it, but the problem is, let If the China Securities Regulatory Commission comes to supervise, the result itself will not be a question of how to supervise, and the final direction will definitely be to ban closures.
In fact, regarding Bitcoin, the central bank has been studying it in recent years and has done a lot of subject research. It has also established a research institute for blockchain and digital currency . There is no doubt that the central bank has a deeper understanding of the Bitcoin market than the China Securities Regulatory Commission. But if Bitcoin transactions must be classified as securities transactions because of ICO issues, then the central bank has no power to supervise them, and the better regulatory agency should be the China Securities Regulatory Commission.
Recently, China Business News interviewed Sheng Songcheng, a counselor at the central bank, on the issue of ICO supervision and whether Bitcoin exchanges should be banned. Regarding the follow-up development of the Bitcoin trading platform, Sheng Songcheng’s answer is: “As the most important and famous blockchain technology carrier and application, Bitcoin is a global blockchain asset that can be traded overseas or underground, so It is difficult to completely ban it, but the transactions of virtual currencies should indeed be further regulated. "At the same time, he also emphasized that any virtual currency is not currency (legal currency) in essence. The advancement of technology will indeed promote the progress of human society and institutional reform, but technology cannot. Alternative state economic policies.
Sheng Songcheng does not represent the central bank’s wishes, but it can express the central bank’s understanding of Bitcoin. The central bank’s understanding of Bitcoin is far better than that of other ministries. From Sheng Songcheng's point of view, first of all, he admitted that Bitcoin is a global blockchain asset that can be traded overseas or underground. It is difficult to completely ban it, and virtual currency transactions should be further regulated.
This is a relatively positive signal.
So which agency is best suited to regulate Bitcoin transactions?
Judging from the existing regulatory agencies, the central bank is the most suitable agency to supervise the transactions of virtual currencies such as Bitcoin. The China Securities Regulatory Commission should play a supporting role and should not become the protagonist. There are three reasons:
First of all, the China Securities Regulatory Commission is not a currency regulatory agency. Although Bitcoin is a transaction model that can be split, as a virtual currency, the so-called minimum share of "Satoshi" (1 Satoshi) can be split. =0.00000001BTC), which is actually similar to 1 RMB = 10 Jiao in reality. This is just a value symbol automatically established by the virtual currency. It is not a standardized securities trading target created by the exchange itself. It is inaccurate to define it as a security. ;
Secondly, if Bitcoin trading is defined as securities behavior, should trading in the foreign exchange market also be regulated by the China Securities Regulatory Commission?
Third, the central bank has a dedicated institution to study blockchain and digital currencies. It has the strongest understanding of the industry and the ability to supervise afterwards.
Speaking of which, we have seen that the supervision of Bitcoin trading platforms has fallen into a very embarrassing situation. Although the central bank has changed its previous definition of Bitcoin as a "virtual commodity", the new "virtual currency" term does not recognize it as a "foreign exchange" asset, let alone its payment and other functions. In this case, the regulation of Bitcoin trading platforms requires a more justifiable reason, and defining it as a quasi-security seems to be the result of many discussions. But I think that from the perspective of central bank research, this is not the final characterization of Bitcoin and Bitcoin transactions.
Furthermore, even if Bitcoin is a standardized transaction, it should not be completely regulated by the Securities Regulatory Commission.Let me give you an example. In the gold market, there are two standardized exchanges in China. One is the "Shanghai Futures Exchange", which has gold futures, and is under the supervision of the China Securities Regulatory Commission; the other is the "Shanghai Gold Exchange", which has gold futures. There is a gold deferred business, which is under the control of the Central Bank of China. Both are standardized transactions, do not interfere with each other, are conducted simultaneously, and operate well.
The current trading form of the Bitcoin exchange is actually similar to gold spot trading. The previous futures-like and financing currency businesses have been discontinued.
In fact, for a long time, the definition of gold trading has been very vague. If it is just offline gold trading, it may not involve financial issues, but once online transactions occur, qualitative issues will arise. The regulatory controversy over the gold trading market still exists today.
The main reason why the Shanghai Gold Exchange and the supervision of gold market transactions are currently firmly in the hands of the Central Bank of China is that the Central Bank of China’s characterization of gold is very clear.
When the People's Bank of China reorganized various gold trading venues in 2011, it made it clear that gold has monetary properties and is an important part of a country's central bank's international reserves, unlike ordinary precious metals. In order to maintain economic and financial security and social stability, gold trading should be carried out in standardized trading venues approved by the State Council or the relevant financial management department of the State Council.
This definition is very important. If gold has no monetary properties, then the central bank will have no control over it.
The current problem encountered by the Bitcoin market is whether the central bank recognizes that Bitcoin has monetary attributes, which is directly related to the issue of who controls Bitcoin transactions.
The Central Bank of China has a “Gold Department” that specializes in managing gold-related issues. In fact, the Central Bank of China has officially established a Digital Currency Research Institute. Regardless of the logical relationship, factual basis, professionalism, etc., the central bank should be the main institution responsible for supervising Bitcoin. How
will develop in the future:
According to the current situation, due to principle issues, it is still difficult for the central bank to admit that Bitcoin is a currency form similar to foreign exchange. Therefore, Bitcoin transactions are likely to be directly defined as a risk by the central bank. Huge financial transactions may be transferred to the Securities Regulatory Commission for supervision, so the possibility of centralized Bitcoin trading being banned and banned is very high.
But I think this ban is not permanent. With the development of Bitcoin in the global market, some countries are likely to legalize Bitcoin and even include Bitcoin in the foreign exchange reserve system. . By that time, Bitcoin transactions may need to be defined in a form similar to gold transactions, and the central bank will have to recognize its financial and monetary attributes.
As for exchanges, if the market has such demand, just like the Central Bank of China established the Shanghai Gold Exchange in 2002, will an official Bitcoin and other virtual currency exchanges be established in the future? I think it is very likely sex.
In other words, after this shutdown, when an exchange is established in the future, it may be a government exchange. What I want to emphasize is that the central bank is now under various pressures and it is impossible to recognize the financial and monetary attributes of Bitcoin, but the trend is unstoppable. Bitcoin’s recognition and its financial and monetary attributes, if we want to rank the world’s currencies, Bitcoin It may rank among the top 50 currencies in the world. Markets in various countries, whether it is regulatory authorities or the market itself, will slowly accept this.
Finally, I would like to say something to researchers who are committed to blockchain and digital currency, as well as many investors, "It is a huge character flaw to not be able to wait."
Good things come after waiting.
text/Xiao Lei
