Why is Bitcoin Regulated by the Government (Why is Bitcoin Illegal in China)?

Why is Bitcoin Regulated by the Government? Why is Bitcoin Regulated by the Government?

In May 2018, the U.S. Federal Court approved the legal trading of Bitcoin futures contracts. According to court documents, “BitMEX” is an unregistered and unauthorized company that disclosed a large amount of illegal digital currency (ICO) in the preliminary prospectus submitted by the SEC in December 2017. This means that the U.S. Securities and Exchange Commission (SASIC), a subsidiary of the U.S. Department of the Treasury, investigates and manages cryptocurrency exchanges. If the report is confirmed and audited and becomes legally recognized, it will provide investors with a way to invest in Bitcoin derivatives. However, this practice has also led to the “black market” in the United States. Since 2013, the U.S. government has been cracking down on fraudulent ICO projects, money laundering, and other illegal activities, as well as other unfair competition activities. However, these issues have not disappeared: “We have not found any crimes related to blockchain.”

Although there are now new regulations for the cryptocurrency industry, such as prohibiting the issuance of tokens to the public, restricting individuals from purchasing or holding digital assets, even banning the sale of goods and services to retail investors, requiring all companies engaged in cryptocurrency mining to refrain from conducting related businesses, prohibiting the sale or ownership of virtual currency by individuals, and prohibiting stocks products operated by third-party brokerage firms. However, with the development of the industry, more and more listed companies are starting to try to launch their own tokens to support their business; moreover, some companies also hope to establish a new financial infrastructure to serve the cryptocurrency market.

Why is Bitcoin Illegal in China

Editor’s note: This article is from Chain Reference (IDlianneican), author: Neicanjun, authorized by Odaily Star Daily for reprint.

Is Bitcoin illegal in China?

According to China Newsweek, “China’s cryptocurrency exchange” Bitfinex has been accused of fraudulent behavior through an unregistered securities-type token trading platform. On October 13, 2019, the People’s Bank of China, the Shanghai branch of the central bank, and three other regulatory agencies issued a statement stating that “no digital assets have been issued before April 2019”, meaning that such products will not be officially launched before the end of 2018. “Therefore, Chinese residents cannot use digital wallets and applications to purchase or exchange legal currency unless they pay the corresponding fines to the government.” According to previous reports, as of the end of June, my country has banned all services related to “virtual currency”. However, since there is no clear legal framework to restrict the development of ICO and blockchain projects, most people believe that Bitcoin is illegal in China. So why is Bitcoin not an illegal activity in the United States? First, let’s take a look at China’s attitude towards digital currencies:

1. Bitcoin is an investment product, not a payment tool, and there are no relevant regulations; 2. For some companies, their operating models are completely different, such as providing stock trading services; 3. From another perspective, Bitcoin is one of the unregulated investment products or financial derivatives.

The United States stated: Although many countries support this initiative, these countries do not recognize them as a means of value storage because they have proven to have great market potential. Canada believes that this is a reasonable technological development; Japan is taking a wait-and-see attitude and considering adopting the technology of foreign companies. If China wants to become a global financial center, it needs a strong regulatory system to allow investors to confidently hold cryptocurrencies and digital assets.

In addition, on January 23, 2019, “Econometrics” published an article titled “China’s Government’s Fight Against Money Laundering,” which pointed out that in response to the economic impact caused by the COVID-19 pandemic and more measures taken by countries to promote the process of trade liberalization, a series of changes in anti-money laundering policies have occurred in recent years. It mentioned that “virtual currency is a new risk management method, especially regarding personal information protection issues.” At the same time, some media also pointed out that several finance departments, including the United Kingdom, have expressed their positions. But it is worth noting that China has not proposed a comprehensive ban.