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China Securities Observation: The risk of speculation is huge, and strict supervision is the general trend



Recently, Bitcoin has once again stepped out of the "roller coaster" market that has skyrocketed and then plummeted. In addition to frequent price rises and falls, reflecting the extreme frenzy of speculation, illegal and criminal activities around virtual currencies have also been exposed, prompting all parties to further examine the regulatory issues of virtual currencies. In fact, a wider consensus is being formed to strengthen the supervision of virtual currency transactions. Recently, bitcoin transactions have once again been "blocked" by some large commercial banks, which may contain new signals of strict supervision.

The sharp rise and fall of prices almost goes hand in hand with virtual currency transactions. This feature has been most vividly displayed in the past two months. At the beginning of March, Bitcoin historically broke through the $60,000 mark. In mid-April, it turned around and fell sharply from a high close to $65,000. It fell by nearly 30% of the market price in more than a week. In recent days, Bitcoin has once again started diving mode. On May 15, the price of Bitcoin fell below $46,000, almost back to where it was before the March rally.

The China Securities Association publicly solicits opinions on the project plan of the "Industry Risk Data Sharing Platform Based on Blockchain and Privacy Protection Technology": On November 19, the Securities Association of China (hereinafter referred to as the China Securities Association) discussed the "Blockchain and Privacy Based The project plan of "Industrial Risk Data Sharing Platform for Protection Technology" is open for public comments.

It is reported that in order to promote the steady development of financial technology in the securities and futures industry, promote the digital transformation of the capital market, and improve the regulatory mechanism for financial technology in the capital market, in March 2021, the China Securities Regulatory Commission took the lead in launching the pilot work of financial technology innovation in the capital market in Beijing.

At present, the "industry risk data sharing platform based on blockchain and privacy protection technology" project led by the China Securities Association has passed the solicitation and selection, expert review, professional evaluation and other work, and is planned to be included in the first batch of financial technology innovation pilots in the capital market. The public is now soliciting opinions on the pilot project plan. The deadline for comments and feedback is November 26, 2021. [2021/11/19 22:04:09]

The sharp fluctuations in prices reflect the prevalence of virtual currency speculation, which contains huge risks. Bitcoin is not a currency, it is a specific virtual commodity in nature. Bitcoin trading is a kind of commodity buying and selling behavior on the Internet, and ordinary people have the freedom to participate at their own risk. However, Bitcoin is fundamentally different from financial commodities. It has no real value support, does not have sovereign credit or commercial credit, and transaction pricing is largely due to speculation. Ordinary investors may face huge transaction risks when participating. According to statistics, from 2016 to the end of 2020, there have been 10 cases where Bitcoin has fallen by 20% or more; there have been 7 cases where Bitcoin has fallen by 30%; and there have been 4 cases where Bitcoin has fallen by more than 48%.

Sound | China Securities News: Make good use of blockchain technology to reduce financial regulatory costs: On November 21, China Securities Journal published a commentary article saying that strengthening supervision and improving the ability to prevent and resolve financial risks are the focus of the work of the regulatory authorities. The application of distributed accounting technology represented by blockchain in the financial field is of great significance to improving regulatory efficiency and policy quality. In the market of asset tokenization (asset tokenization refers to the process of issuing blockchain tokens to electronically represent the rights and interests of tradable assets, similar to the process of traditional asset securitization), the regulatory framework can implement automated compliance for distributed ledgers Monitor, optimize the process of delivering, validating and analyzing data. Blockchain data can be used to improve compliance mechanisms in the financial sector, based on trust mechanisms generated by market common economic incentives. In the future, blockchain technology has the potential to reduce regulatory costs, improve the efficiency of risk monitoring, and promote high-quality financial development. [2019/11/21]

Not only transaction risks, but in recent years, illegal and criminal activities around virtual currencies have also shown an upward trend. The "China Financial Stability Report (2014)" once pointed out three major risks that bitcoin transactions may bring: First, the online trading platform, process and rules of bitcoin lack supervision and legal protection, which is prone to price manipulation and false transactions. There are also risks in the security of its account funds and in the clearing and settlement process; second, the price of Bitcoin lacks reasonable support, and it is easy to become a tool for speculation and hype, or even "bubble burst"; It provides convenience for illegal and criminal activities such as money laundering and money laundering. According to media reports, the largest oil product pipeline operator in the United States, which was blackmailed by hackers, was forced to pay the ransom in virtual currency. This move has also prompted relevant parties to further examine the regulatory issues of virtual currency.

The China Securities Association delineated the subject research direction: involving the core scenario application and value research of the blockchain: Today, the Securities Association of China issued a notice on the application of key subject research in 2018, which involves research on the application of financial technology in the securities industry, including Research on the application and development of intelligent and efficient securities industry promoted by fintech; research on the top-level planning of fintech and regulatory technology in the securities industry; research on compliance and risk monitoring of fintech application business in the securities industry; research on innovation and transformation of the business model of the securities industry by fintech; Financial technology and regulatory technology promote the intelligent and technological research of securities supervision; research on the new model of Internet service securities industry development; core scenario application and value research of blockchain, etc. [2018/4/11]

Recently, a domestic joint-stock bank prohibited accounts from being used for Bitcoin transactions, sparking heated public opinion. The bank said in a statement that the move was "to protect the property rights and interests of the public, maintain the legal tender status of the renminbi, and prevent money laundering risks." This is not the first time a financial institution has "blocked" bitcoin transactions. Shortly after the People's Bank of China and other departments jointly issued a notice on preventing Bitcoin risks, in 2014, more than a dozen domestic commercial banks announced the ban on Bitcoin transactions.

Bitcoin-related transactions are facing increasing scrutiny and regulation around the world. At present, the regulatory authorities of many countries have either explicitly banned the transaction, or introduced policies to impose strict restrictions. In recent years, the relevant domestic departments have always maintained high pressure on the supervision of virtual currency transactions, and there is a trend of continuous increase.

In the view of some observers, after many years, financial institutions have recently taken action on Bitcoin transactions again, which may have released a new signal of strict supervision. In this regard, virtual currency transaction participants, especially investors, should pay attention. At present, there are no bitcoin trading venues in China, and there are no consumer protection measures for "over the wall" to trade bitcoins overseas. Once you encounter risks, you can only bear the consequences. In short, speculating in coins is risky, so you need to be cautious when entering the market.


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