Cryptocurrencies are back in the dark: Central banks ban trading, local mines are blocked

Once again, the regulatory knife has fallen from the sky, and the central bank's regulation of crypto asset trading has been caught off guard.

The People's Bank of China (PBOC) said in a statement on its website on June 21 that it has interviewed some banks and payment institutions, including the Industrial and Commercial Bank of China (ICBC), Agricultural Bank of China (ABC), Construction Bank of China (CCB), Postal Savings Bank (PSBC), Industrial Bank of China and Alipay (China) Network Technology Co., to provide services for the speculation of virtual currency transactions.

The People's Bank of China (PBOC) has pointed out that speculation in virtual currency transactions disrupts the normal economic and financial order and creates risks of illegal and criminal activities such as illegal cross-border asset transfer and money laundering. The central bank clearly pointed out that to "improve the abnormal transaction monitoring model, effectively improve the ability of monitoring and identification," "resolutely cut off the virtual currency trading speculation funds payment link."

Subsequently, Industrial and Commercial Bank of China, China Construction Bank, Alipay and other institutions issued the "Statement on the Prohibition of the Use of BOC Services for Virtual Currency Trading". There are signs that regulation of virtual currency speculation is on the line.

Rhythm Express has been regulated "refresh"

In recent days, Bitcoin and other virtual currencies have been falling for several consecutive days. According to data from CoinMarketCap, as of 18 PM today, Bitcoin is trading at 33,236 US dollars, down 5.07% in 24 hours and 15% in 7 days. It has fallen by half from its previous all-time high.

Central media voiced criticism, and mainstream media frequently published articles

On May 21, the Financial Stability and Development Committee of the State Council (hereinafter referred to as the Financial Commission) held its 51st meeting to study and plan the key work in the financial field in the next stage. The official document said it would crack down on Bitcoin mining and trading and resolutely prevent individual risks from being transmitted to the social sector. This is the first time the State Council has explicitly cracked down on virtual currency mining.

Before this, the voice of "regulation is coming" is rampant, the news out, the regulation is finally landed. Subsequently, mainstream media continued to voice their opinions. Since last month, Xinhua News Agency has published 6 articles in 10 days to closely monitor the "coin circle", covering many fields such as mining, trading, "coin issuance" and carbon emission, which has aroused wide attention.

At the end of May, the Securities Times published an article titled "Bitcoin mining runs counter to the" carbon peak "goal," criticizing the "mining" process for its carbon emissions and energy issues. It wasn't the only major media outlet to report on the issue, as other media outlets also covered a variety of topics. Bitcoin's energy problem has long been a concern in the industry.

In fact, the industry has long been committed to solving the problem of carbon emissions, and the use of clean energy in mining is not uncommon. After Musk suspended Tesla's bitcoin payment function, the issue of bitcoin energy consumption became a hot topic in the industry for a while. The mining industry began to discuss the energy and environmental protection problems of mining on a large scale, trying to change the external prejudice against mining industry thoroughly.    

Bitcoin is De-Sinicized as the Mining Industry Takes a Hit

Public opinion has been accompanied by regulation of mining policies.

In terms of regulation, China's State Council and several local governments have made clear their intention to crack down on Bitcoin mining. Some regions have begun to liquidate Bitcoin mines, which further accelerates the "de-sinicization" of Bitcoin's computing power.

  On May 18, the Development and Reform Commission of the Inner Mongolia Autonomous Region released an announcement on the establishment of a platform for reporting virtual currency "mining" enterprises. The first shot was fired in Inner Mongolia. On the evening of the 25th, the Development and Reform Commission of the Inner Mongolia Autonomous Region issued the "Eight Measures on Strictly Punishing and Punishing the" Mining "of Virtual Currency (Draft for Public Opinion)," requiring a comprehensive clean-up and shutdown of virtual currency "Mining" projects.

After the large-scale liquidation of Inner Mongolia, Xinjiang, Qinghai and Yunnan provinces introduced regulatory measures one after another, leading to a "mass migration" of miners. Until June 18, the "Sichuan Provincial Development and Reform Commission, Sichuan Provincial Energy Bureau on the clean-up and shutdown of virtual currency" mining "project" completely cut off the hope of Chinese miners, the last boot against mining fell to the ground.

Since then, China's Bitcoin miners have faced the most severe challenge in history. Apart from seeking to go out to sea and migrate the mines, it seems that there is no other way to maintain the operation of the mines, and the miners have begun the era of great vagrancy. Since then, all Chinese Bitcoin mines have been closed. Blockchain is still functioning, but in theory, there is no longer a single Bitcoin made in China, and the Chinese computing power that once accounted for more than 70% of the total Bitcoin network has been wiped off the map.

Regulation landed, continued to crack down on trading

The supervision landing, has been in the expectation of many people in the currency circle.

Some people believe that the central bank supervision or the implementation of the 51st meeting of the Financial Commission is not an unexpected black swan. Previously, after the Financial Commission meeting, financial institutions did not come up with specific implementation methods.

In early June, following the crackdown on mining, search engines such as Baidu and sogou and social media such as Zhihu Weibo successively blocked keywords on virtual currency trading platforms. On Weibo, a large number of "We Media" celebrities in the fields of Bitcoin and cryptocurrency have been banned successively. A click on their home page shows that "the account is now unavailable due to the complaint of violating laws and regulations and relevant provisions of the Weibo Community Convention."

On June 9, the China Payment and Clearing Association under the central bank issued a risk warning to the whole industry, "beware of using virtual currency and blockchain technology to evade the source of funds." "Each member unit carries out risk management in the whole process before, during and after the event."

On June 10, media reported that under the unified command of the State Council's Inter-ministerial Joint Conference Office on Combating and Controlling New Crimes in Telecommunication Networks, the public security organs of 23 provinces, autonomous regions and municipalities closed the network simultaneously. The illegal criminal groups that use virtual currencies to provide money transfer and money laundering services for telecom and network fraud will be centrally arrested. More than 170 illegal criminal gangs were destroyed and more than 1,100 criminal suspects were arrested.

It is not unexpected for financial institutions to supervise capital channels under a series of regulatory policies covering many fields.

This is not the first time that authorities have regulated virtual currencies. In the more than ten years of cryptocurrency history, regulation has occurred at times.

As early as 2017, seven ministries had issued a document to accurately understand the nature of token issuance financing activities. In essence, token offering financing is a kind of illegal public financing behavior without approval, which is suspected of illegal and criminal activities such as illegal sale of tokens, illegal issuance of securities, illegal fund-raising, financial fraud, pyramid selling and so on.

In August 2018, five ministries and commissions jointly issued a warning on preventing the risk of illegal fund-raising in the name of "virtual currency" and "blockchain". 'Please view blockchain rationally, do not blindly believe in hype, establish correct currency concepts and investment concepts, and effectively raise risk awareness,' the document said.

For Bitcoin, mining is a primary market and trading is a secondary market, so this new round of regulation covers both primary and secondary markets, exceeding the scope of previous regulations. Compared with the "94th" four years ago, the "621" in 2021 seems to be more severe. Crypto's darkest hour has come again.    

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