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An article to solve puzzles: What is the value of Bitcoin and stable coins? What are the risks? How to supervise?



Original title: What is the value of Bitcoin and stablecoins? What risks exist and how are they regulated? One article solves the puzzle! From "virtual goods" in 2013 to "virtual currency" in 2017, and recently Li Bo, the deputy governor of the People's Bank of China, characterized Bitcoin and stablecoins as "encrypted assets". It can be seen that the understanding and understanding of Bitcoin and stablecoins by Chinese regulators are constantly improving and clarifying. This also highlights that encrypted assets such as Bitcoin and stablecoins have become new key areas of global technology and financial competition. According to the interviewed experts, with the accelerated development of the global digital economy and rising inflation expectations, the value storage function of Bitcoin has gradually become a "global consensus". Stablecoin is one of the important blockchain technology applications and a cutting-edge financial technology, which is considered to have the potential to completely revolutionize the global payment system. However, due to the characteristics of anonymity and wide international circulation of encrypted assets, problems such as market manipulation, fraud, insufficient investor protection, and money laundering have been exposed in the development. In the "Prudential Supervision Requirements for Virtual Assets (Draft for Comment)" issued by the Basel Committee on Banking Supervision, it is proposed that the prudential regulatory framework for encrypted assets should follow the principles of consistency, "technology neutrality", simplicity and minimum standards. Li Bo revealed that he is studying the regulatory rules for Bitcoin and stablecoins. If any stablecoin wants to become a widely used payment tool in the future, it must be subject to the same strict supervision as banks or quasi-banking financial institutions. The reporter noticed that with the global development of "digital currencies" such as bitcoin and stablecoins, Chinese regulators' understanding of bitcoin and stablecoins is also becoming clearer. At the end of 2013, five ministries and commissions including the People's Bank of China defined Bitcoin as a "specific virtual commodity" in the "Notice on Preventing Bitcoin Risks" ("Notice" for short). The "Wooden Sister" flagship fund suffered setbacks during the year, and new clouds have begun to accumulate: According to news on December 30, the worst year for Wooden Sister Kathy Wood has not yet passed, and the dark clouds in 2023 have begun to accumulate. Wall Street has been slashing earnings estimates for some of the largest holdings in her $5.8 billion flagship fund, the ARK Innovation ETF (ARKK) over the past few weeks, signaling more pain for her strategy throughout 2022. Her investment strategy has been hammered by the Fed's most aggressive tightening in decades. With interest rates set to remain at their highest level since 2007, analysts have slashed 12-month earnings forecasts for half of the most heavily weighted companies in ARKK, including Tesla and Zoom, agency data showed. Nate Geraci, president of consulting firm ETF Store, said ARK's portfolio is full of longer-duration technology stocks, which have definitely been affected by rising interest rates. If the Fed turns out to be more aggressive than expected in 2023, watch out it could be another bloodbath. [2022/12/30 22:16:58] The "Notice" pointed out that Bitcoin has four main characteristics: no centralized issuer, limited total amount, use without geographical restrictions, and anonymity. Although Bitcoin is called "currency", it is not a currency in the true sense because it is not issued by monetary authorities and does not have monetary attributes such as legal compensation and mandatory. In terms of nature, bitcoin should be a specific virtual commodity, which does not have the same legal status as currency, and cannot and should not be used as currency in the market. At that time, the "Notice" made it clear that all financial institutions and payment institutions are not allowed to price products or services in bitcoin, buy or sell bitcoin or act as a central counterparty to buy or sell bitcoin, and must not underwrite insurance business related to bitcoin or include bitcoin in insurance liability. It shall not directly or indirectly provide customers with other bitcoin-related services, including: providing customers with bitcoin registration, transaction, clearing, settlement and other services; accepting bitcoin or using bitcoin as a payment and settlement tool; conducting bitcoin and RMB (6.4995, -0.0108, -0.17%) and foreign currency exchange services; carry out bitcoin storage, custody, mortgage and other businesses; issue bitcoin-related financial products; use bitcoin as investment targets for trusts, funds, etc. Wait. The music NFT platform Melos Studio will launch the pledge NFT function: On April 6, the Web3.0 music NFT platform Melos Studio announced the launch of the pledge function, and the pledge pool will be launched on at 8:00 p.m. on April 6. Users will be able to obtain Melos Token rewards by staking Melos Token and Melos NFT. [2022/4/6 14:07:22] In September 2017, seven departments including the People’s Bank of China emphasized in the “Announcement on Preventing Financing Risks of Token Issuance” (the “Announcement” for short) Illegal sale, circulation, and so-called "virtual currencies" such as Bitcoin and Ethereum raised from investors are essentially illegal public financing without approval. Tokens or "virtual currencies" used in token issuance financing are not issued by monetary authorities, do not have currency attributes such as legal compensation and mandatory, do not have the same legal status as currency, and cannot and should not be circulated in the market as currency use. Recently, Li Bo, deputy governor of the People's Bank of China, stated at the Digital Payment and Digital Currency Sub-forum of the Boao Forum for Asia Annual Conference 2021 that Bitcoin and stablecoins are encrypted assets. Encrypted assets are an investment option. It is not a currency itself, but an alternative investment product. The main role that encrypted assets may play in the future is as an investment vehicle or alternative investment. Yin Zhentao, director of the Financial Technology Research Office of the Institute of Finance and Economics of the Chinese Academy of Social Sciences, pointed out in an interview with a reporter from the International Finance News that "from virtual commodities in 2013, to virtual currencies in 2017, and to today's encrypted assets", China's central bank compared The understanding and understanding of "digital currencies" such as Bitcoin are constantly being sublimated and clarified, which is not only conducive to regulatory enforcement and judicial practice, but also more in line with market laws and development trends. With the accelerated development of the global digital economy and rising inflation expectations, the value storage function of Bitcoin has gradually become a "global consensus". According to Yu Jianing, the rotating chairman of the Blockchain Committee of China Communications Industry Association and the president of Huobi University, the key value of Bitcoin can be mainly reflected in four aspects: American rapper Quavo reached a cooperation with InnocentCats: March 13 It is reported that American rapper and hip-hop trio Migos lead singer Quavo has reached a cooperation with the NFT project InnocentCats, and will hold its first Metaverse concert in the second quarter of this year. This concert is based on the Metaverse platform SecondLive on BSC, and it is also SecondLive's first experimental Metaverse Hip-Hop & Rap concert. In November last year, SecondLive completed its seed round of financing at a valuation of US$30 million. BlockArk’s ArkStream Capital and others participated in the investment, and received financial support from BSC’s US$1 billion growth fund and BinanceLabs. The new financing will accelerate the growth of the platform and further promote its Metaverse function. [2022/3/13 13:54:11] Yu Jianing told the "International Finance News" reporter that, first of all, the mining mechanism is the "basic disk" of Bitcoin value, and the power consumption and depreciation of mining machines in the mining process , Continuously input value into the Bitcoin network, realize the value transformation from the physical world to the digital world, and constitute the basic value of Bitcoin. Secondly, the total amount of bitcoins is limited to 21 million, and 18.686 million bitcoins have been "mined" so far, equivalent to nearly 90% of bitcoins have entered circulation, and the current nominal inflation rate is only 1.75%, which is lower than the 2% target of central banks. general inflation target. However, due to the frequent loss of bitcoin private keys, the number of bitcoins in circulation will also decrease due to various reasons, and substantial deflation may occur in the future. affect price movements. Thirdly, Bitcoin has been recognized and participated by traditional financial institutions and listed companies, which has become a key part of Bitcoin value capture. Since 2020, the world's largest asset management company BlackRock, Singapore's DBS Bank, Sberbank, Bank of New York Mellon, Goldman Sachs and other top financial institutions will carry out encrypted asset trading and custody business, Tesla, Well-known listed companies such as PayPal, Square, MicroStrategy, and Meitu have incorporated Bitcoin into their core asset allocation. Canada has also successively launched a number of Bitcoin ETF funds based on actual assets, and Hong Kong has also launched 100% anchored Bitcoin. fund products. Ryuichi Sakamoto will release "Merry Christmas Mr. Lawrence" NFT work: On December 21, Japan Co., Ltd. Gentosha announced that Ryuichi Sakamoto's "Merry Christmas Mr. Lawrence" NFT work with a total of 595 notes will be launched today, and It will be released on the "Adam byGMO" platform from December 21st to 23rd at a fixed price of 10,000 yen (tax included) for 1 note (that is, 1 NFT work). The payment method can choose credit card payment or Japanese yen payment by bank transfer, and ETH payment is also supported. [2021/12/21 7:52:32] Finally, Yu Jianing believes that the status of Bitcoin in the digital world is similar to the status of the US dollar in international trade. Emerging applications based on blockchain are booming, and the changes in digital technology centered on blockchain in the next ten years will become the key driving force for the development of the entire world. The more scenarios that use the blockchain, the greater the demand for Bitcoin reserves, which will undoubtedly have a huge impact on the value of Bitcoin. Since Bitcoin has become a new key field of global technology and financial competition, governments of all countries are increasing their regulatory attention and exploration in this field. From a global perspective, the United States and Japan are at the forefront of the regulation of Bitcoin. The United Kingdom, Canada, Australia, Switzerland and other countries also recognize the positive significance of Bitcoin and are working on formulating relevant regulations to regulate the development of the industry. Russia and Thailand have also shifted from the original prohibition to relaxation. Singapore's attitude towards blockchain technology and encrypted assets has also become more open and positive, encouraging financial innovation under the "regulatory sandbox" system. Singapore is at the forefront of the industry in formulating laws and regulations related to encrypted assets. In addition, in Hong Kong, China, the Hong Kong Securities Regulatory Commission issued new regulations on encrypted assets, which issued specific terms and conditions for encrypted assets, thereby balancing the protection of interests of holders, financial innovation and financial stability. FBI Seizes $2.3 Million in Bitcoin From REvil and Gandcrab Ransomware Affiliates: Dec. 1 News Court documents reveal that the FBI seized $2.3 million in August from a well-known REvil and Gandcrab ransomware affiliate. Ten thousand U.S. dollars. In an indictment unsealed today, the FBI seized 39.89138522 bitcoins, worth approximately $2.3 million at current prices ($1.5 million at the time of the seizure), from an Exodus wallet on August 3, 2021. The FBI did not say how they accessed the wallet, other than to say the wallet was in its custody, suggesting they may have obtained the wallet's private key or password. (Bleeping Computer) [2021/12/1 12:43:17] In addition to Bitcoin, stablecoins are considered to have the potential to completely revolutionize the global payment system. Stablecoins are issued with legal currency or assets as collateral, and their value is anchored with a certain legal currency to achieve price stability. They have a certain degree of currency attributes, and at the same time have the technical advantages of blockchain encrypted assets, so they can be used as payment One of the options for means. Beginning in 2019, business giants such as IBM, JP Morgan, Facebook, Wal-Mart, Goldman Sachs, etc. have also successively announced their exploration of stablecoins. Among them, the most influential ones include the stable currency project Diem (formerly known as Libra) led by Facebook in June 2019 and the JPM Coin launched by JP Morgan in February 2019. In January 2021, the U.S. Office of the Comptroller of the Currency issued an open letter stating that the National Bank of the United States and the Federal Savings Association can use public blockchains and stablecoins for settlement. Visa also announced in March this year that it will allow customers to use the stable currency "USD Coin" ("USDC" for short) to settle transactions on its payment network. After Facebook announced the lead launch of Libra, many countries and international organizations began to pay attention to and study the regulatory issues of stablecoins, and formed a series of regulatory principles that can be used for reference. For example, the Financial Stability Board (Financial Stability Board, FSB), an international financial regulatory coordination organization established by the G20, released "Responding to Regulatory Challenges Brought by Global Stablecoins (Draft for Comment)" on April 14, 2020, based on the principle of consistency And the principle of technology neutrality, put forward ten regulatory principles to deal with the challenge of global stable currency. The draft for comments proposes that global stablecoins can basically be included in the current regulatory framework, but specific issues need to be analyzed in detail, and the specific rules that should be applied and the division of responsibilities between regulatory agencies should be clarified based on the operating mechanism and economic functions of different stablecoins ; If there are regulatory gaps, then consider formulating supplementary regulations. On November 24, 2020, the Bank for International Settlements (BIS) issued a work report "Stablecoins: Risks, Opportunities, and Regulation", arguing that the regulation of stablecoins should be based on the many conveniences they may provide, not limited to existing ones. Some regulatory frameworks can consider implementing "embedded regulation", that is, directly embedding regulatory requirements into the realization of the "global stable currency" system. In addition to the regulatory proposals of international regulatory organizations, the United States, as the country with the largest stablecoin anchored to fiat currency, has also proposed a series of regulatory requirements for the operation of stablecoins. In September 2020, the U.S. Office of the Comptroller of the Currency (OCC) issued guidance stating that U.S. federally chartered banks and federal savings associations can store reserves for stablecoin issuers. However, banks are only allowed to provide storage services for stablecoin issuers that issue a 1:1 anchored single legal currency. In addition, banks must verify that the balance of the reserve account is always equal to or greater than the issuer's outstanding stablecoin amount at least every day. Yu Jianing pointed out that stablecoins under the U.S. regulatory framework are only applicable to stablecoins that have been reviewed and approved by the regulatory authorities and are subject to continuous supervision, that is, USDC, GUSD, PAX, etc. that have obtained operating licenses. To promote compliant stable currency payments on a global scale, it still needs the consensus of the international community and the formation of international rules to be followed. Therefore, the participation of international organizations and the coordination and cooperation of countries are even more needed.


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