Comprehensive upgrade of virtual currency rectification, mining withdrawal and prohibition of related business activities

On September 24, the National Development and Reform Commission and other 11 departments issued the "Notice on Renovating Virtual Currency "Mining" Activities" (hereinafter referred to as the "NDRC "Notice"), announcing that virtual currency "mining" activities will be officially classified as eliminated industry. At the same time, 10 departments including the People’s Bank of China issued the “Notice on Further Preventing and Disposing of the Risks of Virtual Currency Trading Speculation” (hereinafter referred to as the “Notice” of the Central Bank), clarifying that virtual currencies do not have the same legal status as legal tender, and related business activities belong to Illegal financial activities. It is worth mentioning that the provision of services by overseas virtual currency exchanges to Chinese residents through the Internet has also been classified as illegal financial activities.

Hu Jie, a professor at the Shanghai Advanced Institute of Finance at Shanghai Jiao Tong University, said that the two "Notices" reiterated previous regulations on virtual currencies, but implemented more stringent rectification policies.

As early as September 4, 2017, the central bank and other seven departments jointly issued a document calling for the suspension of initial coin offering (ICO) and characterizing the ICO as an unauthorized and illegal public financing activity, suspected of illegally selling tokens, coupons, and Illegal issuance of securities and illegal fundraising, financial fraud, pyramid schemes and other illegal and criminal activities. Since then, all domestic virtual currency exchanges have withdrawn and moved overseas. However, these overseas exchanges still attract many domestic investors. Especially since the second half of last year, Bitcoin and other virtual currencies have seen a large increase, and the enthusiasm for currency speculation has expanded again.

On the other hand, the production process of Bitcoin-mining is a high energy consumption activity. Although it has been retired or restricted by local governments several times, as the Bitcoin market has improved, a crazy scene has also appeared.

The "Notice" of the National Development and Reform Commission pointed out that the rectification of virtual currency "mining" activities is of great significance to promoting the optimization of my country's industrial structure, promoting energy conservation and emission reduction, and achieving the carbon peak and carbon neutral goals as scheduled.

According to Hao Yi, a researcher at the Bank of China Research Institute, with the influx of a large amount of capital into the virtual currency market, the number of miners has increased sharply, and the cost of generating virtual currency through mining is getting higher and higher. According to statistics, it takes 184634 degrees to mine 1 bitcoin. Electricity. Since our country has low electricity charges for the protection of people's livelihood, most of the mining machines are in our country.

"A large amount of energy is consumed in mining that has no real value. It is a waste of energy. It is not conducive to the rapid development of our country’s economy. Risky markets are not conducive to protecting the wealth of the people." Hao Yi said.

A researcher from the Suning Institute of Finance said that various “innovations” from computing mining to hard disk mining consume precious electricity energy, especially in Inner Mongolia, Qinghai, Sichuan and other places where there are many mining activities in dependent power stations. , Is not conducive to the achievement of my country's carbon peak in 2030, nor is it conducive to the achievement of my country's carbon neutral goal in 2060. He also said that the development of virtual currencies also threatens the stability of the financial ecology. Now that many listed companies purchase virtual currencies such as Bitcoin and Ethereum, they will have greater risks and will also bring more difficult to track. Criminal acts such as terrorist financing and money laundering have all aroused great attention from national regulatory agencies.

In the rectification of virtual currencies, China has always been at the forefront of the world.

Since the beginning of this year, the national and local regulatory authorities have made arrangements to rectify virtual currencies on many occasions.

On May 21, the 51st meeting of the Financial Stability and Development Committee of the State Council clearly stated that it would crack down on Bitcoin mining and trading and resolutely prevent individual risks from being transmitted to the social field. Prior to this, Inner Mongolia had begun to clear Bitcoin mining activities within its jurisdiction. Since then, more provinces such as Sichuan, Qinghai, and Yunnan have joined the ranks of clearing Bitcoin mining.

On September 14, the Hebei Provincial Cyberspace Administration and relevant departments carried out the rectification of virtual currency mining and trading activities, stating that “virtual currency mining consumes a huge amount of energy and runs counter to my country’s goal of “carbon neutrality and carbon peaks”. Its exchange and trading It is highly disruptive to my country's financial order, and financial risks are high, and they are mostly related to black and gray products; its proliferation and spread will seriously affect economic and social development and directly threaten national security."

Sun Yang said that China is now vigorously advocating green finance ESG, and virtual currency mining is a high energy consumption activity, which is very unfavorable to the construction of green finance, and is not conducive to the contribution of finance to my country's carbon peak and carbon neutral goals.

Hu Jie believes that China's social sentiments with a large number of people involved in speculation have enhanced the government's risk awareness of virtual currencies. When everyone is chasing the bubble, and the supervision methods cannot keep up in time, it may cause mass incidents and cause a large number of people to be harmed. The time and space left to the supervisory authority is not sufficient at the moment, so the government has taken relatively simple and direct actions.

"The majority of participants in my country's capital market are retail. Banning private cryptocurrencies can guarantee the safety of people's property to the greatest extent. At the same time, my country has always emphasized that finance must be'bringing away from the virtual to the real', and capital must be used to serve the real economy." Hao Yi said, The private cryptocurrency market does not generate any value, and capital entry can only be idle, which is not conducive to achieving the goal of "common prosperity".

In the process of rectifying virtual currency, what issues should be paid attention to?

The "Notice" of the National Development and Reform Commission pointed out to speed up the orderly withdrawal of stock projects, investigate and deal with illegal power supply behaviors in accordance with the law, implement differential electricity prices, and prohibit virtual currency "mining" projects from participating in the power market. In addition, stop all financial and tax support for virtual currency "mining" projects, stop providing financial services for virtual currency "mining" projects, and eliminate them within a time limit in accordance with the "Industrial Structure Adjustment Guidance Catalog".

"The existing projects are mainly exchanges and mining projects. In the sense of legal registration, most exchanges have moved out of China. However, the actual business of the exchange, including technology and support services, still remains in China. And mining Mining projects have also shown a sea boom in recent months, and many have moved to Canada and Russia." Hu Jie said.

Regarding the orderly exit, Hao Yi said that the construction of a mine involves not only power supply, but also computer hardware, venues and many other early-stage investments. It takes time to process these early-stage investments in an orderly manner to avoid the negative impact of "shock therapy" on social stability. Influence.

At the same time, the "Notice" of the National Development and Reform Commission pointed out to strengthen the supervision of the entire industry chain of virtual currency "mining" activities, prohibit new virtual currency "mining" projects, and accelerate the orderly exit of existing projects. The Central Bank's "Notice" pointed out the establishment of a multi-dimensional, multi-level risk prevention and disposal system.

“Subsequently, the regulatory authorities will issue many detailed rules and specific actions. For virtual currency business activities, it will initiate a dedicated, in-depth and long-term rectification in financial institutions and related industries.” Sun Yang said, now virtual currency-related business activities are changing. Concealment is very strong. For example, through the form of digital art auction, it is necessary to strengthen the research and identification of various hidden variants involving virtual currency. Sun Yang also stated that the rectification of virtual currencies should be included in the long-term assessment of local financial supervision, financial institutions, relevant localities, energy management departments, and power companies.

"The process of rectifying virtual currency should be advanced scientifically. Virtual currency essentially uses new technology to do some existing businesses in traditional finance, so the traditional financial framework itself can cope with it." Hu Jie said, even if there are some new ones. Technical characteristics can also be appropriately studied.