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Why does the Financial Commission declare that it "cracks down on Bitcoin mining and transactions": prevent hot money + clean up norms + carbon neutrality



On May 21, the Financial Stability and Development Committee of the State Council (hereinafter referred to as the Financial Committee) held the 51st meeting, which mentioned "strengthening the supervision of financial activities of platform companies, cracking down on bitcoin mining and trading, and resolutely preventing individual risks from spreading to the social field." transfer".

Because about 75% of Bitcoin "mining" is in Sichuan, Xinjiang and other places, the tightened supervision from the Financial Commission made Bitcoin, which had just taken a little respite, tremble again. Within 10 minutes after the news was released, the price of Bitcoin fell Over $2,000, fell to the $40,000 mark that was finally recovered.

As of 23:49 on May 21, Beijing time, the price of Bitcoin was $37,258, and the price change within 24 hours changed from a rise of 2.39% this morning to a fall of 8.05%. Price fluctuations will inevitably affect the fragile and sensitive nerves of Bitcoin investors again, and liquidation is a direct phenomenon. As of 23:27 on May 21, Beijing time, $974 million of bitcoins had been liquidated within 24 hours, and $219 million had been liquidated within one hour.

Why did the Financial Commission issue a policy to crack down on Bitcoin mining and trading at this time? An industry insider who has participated in the research and development of digital currency believes that there are many possible reasons for cracking down on bitcoin mining and trading, including preventing "hot money" funds from using bitcoin to enter and exit the country illegally, cleaning up and regulating the concept and scope of digital currency, and carbon neutrality. And under the trend, Bitcoin mining consumes too much power, etc.

Russia's Financial Commission: Russia's Largest Stock Exchange May Create Cryptocurrency Exchange: Golden Finance reports, Bitcoin Archive said on social media that Russia's largest stock exchange may create its own bitcoin and cryptocurrency, said the director of the Russian Financial Commission exchange. [2022/7/7 1:58:26]

The above-mentioned industry insiders believe that the decision-making thinking of the Financial Committee should be viewed in context. The Finance Committee also proposed today to "further promote the market-oriented reform of interest rates and exchange rates, and maintain the basic stability of the RMB exchange rate at a reasonable and balanced level." "Hot money" funds flow in and out of the country with the help of cryptocurrencies such as Bitcoin.

According to the WeChat public account "Moganshan Research Institute", recently, Zhou Chengjun, director of the Financial Research Institute of the People's Bank of China, said at the Moganshan Conference that, overall, the RMB will continue to appreciate against the US dollar in the medium and long term. This is not only the result of the continuous growth of the Chinese economy and the continuous improvement of the relative purchasing power of the renminbi, but also one of the consequences of the Fed’s quantitative easing and continuous expansion of its balance sheet. Moreover, empirical data also show that most countries that have successfully stepped over the middle-income trap have a per capita income of more than 10,000 US dollars. , its currency will continue to appreciate against the US dollar.

Chairman of the Russian Financial Committee: Russians have invested 5 trillion rubles in cryptocurrency: On December 20, the chairman of the Russian State Duma (lower house of parliament) Financial Market Committee stated that Russians have invested 5 trillion rubles (approx. 67.44 billion), so it is necessary to regulate the market. (Satellite News) [2021/12/20 7:52:03]

In fact, cases of cross-border money laundering using Bitcoin are not uncommon. In March of this year, the Supreme People's Procuratorate and the Central Bank issued a typical case of punishing money laundering. The Shanghai Pudong New Area People's Procuratorate found after review that Chen Moubo opened a digital currency trading platform to issue virtual currency, and tricked customers into recharging and trading on the platform, and fabricated platform transaction data. Cover up the funding gap, delay or even refuse investors to withdraw cash. Chen Mouzhi helped Chen Moubo transfer funds for fund-raising fraud overseas by means of bank transfers and exchanging bitcoins. Relevant persons from the Supreme Procuratorate pointed out that the use of virtual currency cross-border exchange to convert criminal proceeds and proceeds into overseas legal currency or property is a new means of money laundering crimes in recent years.

In addition, there is no authoritative definition of what is "digital currency" in mainland China, and the public and the media are also at odds. With the gradual promotion of central bank digital currency, supervision may need to clarify the definition and scope of digital currency.

The Office of the Financial Commission issued 11 financial reform measures: According to the unified deployment of the Financial Commission of the State Council, member units of the Financial Commission, such as the Development and Reform Commission, the Ministry of Finance, the People's Bank of China, the China Banking and Insurance Regulatory Commission, the China Securities Regulatory Commission, and the State Administration of Foreign Exchange, based on in-depth research, follow the "mature According to the "one launch one" principle, 11 financial reform measures will be launched in the near future. (Official website of the central bank) [2020/5/27]

As early as December 2013, the People's Bank of China and other five ministries and commissions issued the "Notice on Preventing Bitcoin Risks", clarifying that Bitcoin is not issued by the monetary authority and does not have monetary attributes such as legal compensation and mandatory. currency. In terms of nature, Bitcoin is a specific virtual commodity that does not have the same legal status as currency, and cannot and should not be used as currency in the market.

At the same time, the research and development and testing of my country's central bank digital currency (DC/EP) are still in progress. At the end of 2019, digital renminbi successively launched pilot tests in Shenzhen, Suzhou, Xiongan New Area, Chengdu, and the Beijing Winter Olympics scene. By October 2020, six pilot test areas in Shanghai, Hainan, Changsha, Xi'an, Qingdao, and Dalian will be added. At present, the application scenarios of digital renminbi continue to expand, gradually covering many fields such as living bill payment, catering services, transportation, shopping and consumption, and government services.

News | The Financial Commission released a new tool called \"Blockchain Warning List\": According to China Galaxy Securities, the Financial Commission (FinaCom PLC) today released a tool called "Blockchain Warning List (Blockchain Warning List)" New tool that provides information on potentially disruptive behavior by certain digital asset providers. Being on the list doesn't necessarily mean the company is running a fraudulent scheme. Gold note: FINACOM PLC Limited ("Financial Commission") is an independent industry self-regulatory organization and external dispute resolution organization (EDR) specially established for the foreign exchange field. [2019/3/15]

From a more macro perspective, the method of obtaining Bitcoin - "mining" is extremely power-intensive, and has been criticized by public opinion for this reason.

The production process of virtual currency is called "mining", and the most important cost is the electricity required for the operation of "mining machines". Therefore, "mines" are gathered in areas with sufficient electricity and cheap electricity, such as Xinjiang and Inner Mongolia, which are rich in thermal power, And Yunnan, Sichuan, and Guizhou, which are rich in hydropower. However, thermal power consumes a lot of energy, which is contrary to recent national policies such as carbon peaking and carbon neutrality.

News | Korea Financial Commission will announce the ICO market survey results in November: According to Decenter.sedaily, Hong Nam-ki, Minister of the Korean Government Policy Coordination Office, said that the Korean Financial Commission conducted a survey on the ICO market from September to October, and the results of the survey came out Afterwards, a degree of government stance will be formed in November. [2018/10/11]

Previously, the Alternative Finance Center of Cambridge University released data stating that the total energy consumption of Bitcoin is between 40-445 terawatt hours (TWh), and the average statistics are about 130 MWh, and the electricity consumed by Bitcoin mining in a year is about It is equivalent to the national electricity consumption of the Netherlands. But in reality, Bitcoin's true power consumption figures may actually be much higher. Because as the price of Bitcoin soars, new miners can also "make money" by mining with "mining machines" that have been used for a long time.

A major consensus in the Bitcoin mining industry is that "at least 60% of the computing power of the entire network is in China." For my country, the situation may be even more severe. According to the above research, about 65% of cryptocurrency mining activities are carried out in China, and coal accounts for about 60% of China's energy structure. About 75% of miners use some kind of renewable energy, but renewable energy still accounts for less than 40% of total energy consumption.

Since the beginning of this year, some areas of my country have successively warned of power supply gaps. According to media reports, Zhejiang Province issued a notice in April, predicting that in 2021, the power balance in Zhejiang Province will be tightened in an all-round way, and there will be a hard gap in summer and winter peaks. Since the beginning of this year, affected by the economic recovery and the La Niña phenomenon, Guangdong's electricity load has maintained rapid growth. In April, the maximum load of Guangdong's unified regulation is expected to reach 110 million kilowatts, which is 2 million kilowatts higher than the forecast at the beginning of the year. There will be a certain power gap during local peak hours. .

In recent years, some areas of the country have also strictly prohibited "mining". On May 18, the Inner Mongolia Development and Reform Commission issued an announcement saying that in order to further broaden the sources of problems in virtual currency "mining" companies and give full play to the role of public supervision and protection, a reporting platform for virtual currency "mining" companies has been specially established. There are four main scopes of reporting: virtual currency "mining" companies; virtual currency "mining" companies that pretend to be data centers to enjoy preferential policies in taxation, land, electricity prices, etc.; providing venue leases for virtual currency "mining" companies Enterprises that obtain electricity supply through illegal means and engage in virtual currency "mining" business.

On May 18, the China Internet Finance Association, the China Banking Association and the China Payment and Clearing Association jointly issued the "Announcement on Preventing the Risk of Hype in Virtual Currency Transactions". The announcement requires that relevant institutions shall not conduct businesses related to virtual currencies. Financial institutions, payment institutions and other member units must earnestly enhance their social responsibilities. They must not use virtual currency to price products and services, must not underwrite insurance business related to virtual currency or include virtual currency in the scope of insurance liability, and must not directly or indirectly provide customers with other services. Services related to virtual currency.

The three associations pointed out that the above-mentioned prohibited acts include but are not limited to: providing customers with virtual currency registration, transaction, clearing, settlement and other services; accepting virtual currency or using virtual currency as a payment and settlement tool; carrying out exchange services between virtual currency and RMB and foreign currencies ; carry out virtual currency storage, custody, mortgage and other businesses; issue financial products related to virtual currency; use virtual currency as investment targets for trusts, funds and other investments.

The announcement reminds consumers to raise awareness of risk prevention and beware of loss of property and rights. The majority of consumers should enhance risk awareness, establish correct investment concepts, refrain from participating in virtual currency transaction speculation, and beware of damage to personal property and rights. Personal bank accounts should be cherished and not used for recharging and withdrawing virtual currency accounts, buying and selling related transaction recharge codes, and transferring related transaction funds to prevent illegal use and personal information leakage.

Under the combination of the three associations, Bitcoin, which was already on a downward trend, plummeted, falling as low as the support point of 30,000 US dollars, and the highest intraday drop reached 31.22%. However, at around 22:00 on the evening of May 19, Bitcoin stabilized and rebounded, and remained at a relatively high level of US$40,000 before the Financial Commission's voice.

However, the uncommon volatility of Bitcoin this time has made central banks and regulators wide-eyed.

On May 20 local time, the Bank of Canada stated in its annual financial risk assessment that the volatility of cryptocurrency assets is a new vulnerability faced by the country's financial system. Policymakers led by Governor McCollum said that while the crypto market is not yet of systemic importance as an asset class or payment method, if a large technology company with a large user base decides to issue a widely accepted payment method With the help of cryptocurrencies, this may be about to change. Norges Bank also warned that if banks continue to increase their investments in cryptocurrencies, the sharp price fluctuations of the latter could cause trouble for the banking system. On May 20, local time, the Biden administration also proposed a new proposal that transfers of cryptocurrencies exceeding $10,000 must be reported to the U.S. tax authorities, and the price of Bitcoin subsequently fell by about 5%.


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