As the central bank's digital currency began to recruit troops, a campaign against the currency circle began across the country.
According to rectification notices from Shenzhen, Shanghai, and Beijing, any local Internet companies or exchanges that are engaged in virtual currency activities, including digital currency fund raising, will be deemed to be operating illegally, and the companies will be urged to immediately correct and exit. As of November 22, the official Weibo of two of China's three major digital currency exchanges has been blocked, and one has been filed for review by the court due to customer prosecution.
On the morning of November 22, the progress of the central bank’s digital currency accelerated again, and the Yangtze River Delta Financial Technology Co., Ltd., a subsidiary of the People’s Bank of China, released recruitment information for 2019.
Due to the heavy blows of regulatory authorities in the past three weeks, the regular army may replace the existing currency trading ecosystem. Investors' willingness to hold currency has been significantly reduced, selling has been fierce, and the digital currency market has been bleak. On the evening of November 22, the digital currency market suddenly plummeted across the board. Amid investors' fright, the price of Bitcoin once fell below US$7,000 during the session. The market value of Bitcoin fell by 150 billion yuan in 24 hours, and the decline was close to 30% in the past three weeks.
The crackdown on bandits and arrests in the currency circle may be serious.
If the regular army wants to enter the scene and gain the support and trust of the people, they must first drive away the bandits who are harvesting leeks.
On November 22, the Shanghai Headquarters of the Central Bank of China announced that the Shanghai Financial Stability Joint Conference Office and the Shanghai Headquarters of the People's Bank of China, together with relevant departments at both urban and Shanghai levels, carried out special rectification of virtual currency-related activities in the Shanghai area, ordering problematic companies found during the survey to provide publicity, diversion and other services for virtual currency trading platforms registered overseas to immediately rectify and exit.
On November 22, the official website of the Shenzhen Local Financial Supervision and Administration Bureau announced that the Shenzhen Leading Group Office for Internet Financial Risks and Other Special Rectification Work recently issued a risk reminder on preventing illegal activities of "virtual currency". The notice stated that in response to some phenomena of organizing virtual currency transactions, issuing virtual currencies, raising funds or virtual currency assets such as Bitcoin and Ethereum within the country, the Shenzhen Internet Financial Risks and Other Special Rectification Leading Group Office will investigate and collect evidence for the above illegal activities. Once discovered, it will be dealt with seriously in accordance with the requirements of the "Announcement on Preventing Token Issuance and Financing Risks".
On November 15, under the leadership of the Shanghai Mutual Finance Rectification Office, the Shanghai Joint Financial Stability Office and the Shanghai Headquarters of the People's Bank of China jointly issued the "Notice on Carrying out Rectification and Rectification of Virtual Currency Trading Places" (hereinafter referred to as the "Notice") to carry out the Rectification and Rectification of Virtual Currency Exchanges within their jurisdiction, and complete the investigation and rectification work before November 22.
On November 13, the Beijing Local Financial Supervision Bureau issued the “Risk Warning Regarding Trading Venue Branches Carrying Out Business Activities Without Approval.” According to relevant reports, the "Tips" clearly stated that if branches of out-of-town trading venues (especially financial asset exchanges) carry out business activities in Beijing, it is an illegal operation.
On November 11, the Department of Industry and Information Technology of the Inner Mongolia Autonomous Region issued a notice on a joint inspection of the cleanup and rectification of virtual currency “mining” companies. The inspection period will last from November 11 to November 25, 2019.
It is worth mentioning that the notice of this rectification activity in Shanghai stated that recently, with the promotion of blockchain technology, virtual currency speculation has shown signs of resurgence. In order to prevent a resurgence, according to the relevant deployment of the National Mutual Finance Rectification Office, each district rectification office is requested to conduct a survey and ranking of the three types of virtual currency-related activities within its jurisdiction.
It is reported that the activities included in the scope of rectification include: organizing virtual currency transactions within the country; issuing virtual currencies in the form of "xx coins" and "xx chains" on the grounds of "implementation of blockchain application scenarios" to raise funds or virtual currencies such as Bitcoin and Ethereum; providing publicity, diversion, agency trading and other services for ICO projects and virtual currency trading platforms registered overseas. The "Notice" requires that once Internet companies engaged in the above-mentioned virtual currency-related activities are discovered, the rectification offices of each district in Shanghai should immediately report to the Shanghai Financial Stability Joint Office (Shanghai Local Financial Supervision Bureau) and the Shanghai Headquarters of the Central Bank, and urge the companies to rectify and exit immediately.
Since the end of October, the regulatory level has launched a heavy attack on the currency ecosystem. Who is the core target of this attack?
“It seems like we are going to crack down on digital currencies that raise illegal funds, but in fact the core target of the attack is digital currency exchanges.” The person in charge of a blockchain project in Shenzhen told a reporter from China Brokerage that the core of the chaos in the currency circle is the exchange. For all digital currency projects, if there is no platform, endorsement and publicity provided by the exchange, it will be difficult to cut leeks.
It is the exchanges that really make money in the currency circle. As for various digital currency projects, the income they get from cutting leeks is only a drop in the bucket compared to digital currency exchanges.
On October 30, most of the staff of the Biss exchange were taken away by the police for investigation, mainly on suspicion of fraud and money laundering, including the founder BMAN and BISS employees. It is said that the people taken away also included an intern who had not officially joined the work.
Since BISS Exchange stores a large number of digital currency assets, the exchange itself also issues Villa Coins, a digital currency variety based on the exchange business. After everyone lost contact inexplicably, on the afternoon of October 30, many users belatedly discovered that there was no review of currency withdrawals on the BISS exchange. Users' currency withdrawals prompted a server error, and customer service staff did not respond. Fearing what might have happened, some smarter users immediately began to sell villa coins. That night, the villa coins issued by BISS exchange plummeted by 50% in 15 minutes.
Rectification focus may be on digital currency exchanges
Why digital currency exchanges are the most dangerous part of the industry rectification is because digital currency exchanges are the infrastructure that maintains the operation of the currency circle, and they are also the most capable of cutting leeks. Each exchange is keen to issue its own digital currency. Although securities companies in the A-share market also hope that their companies will issue stocks and go public, this is easy to understand due to the support of licensed businesses. However, digital currency exchanges that do not have domestic license qualifications have more naked intentions in their operations.
Digital currency exchanges issue their own digital currencies. In fact, these copycat teams hope to use their own digital currencies to obtain Bitcoins from users through currency-to-crypto transactions.
Theoretically speaking, Bitcoin may be the only credible asset in the current digital currency field. In other words, the exchange uses the so-called digital currency created by itself and has no scarcity to exchange for the relatively scarce Bitcoin in the hands of users.
High school history textbooks once gave a detailed introduction to the old society's indiscriminate distribution of gold yuan coupons to obtain silver dollars. If the exchange is closed, the digital currency issued by the exchange itself will become worthless. However, by exchanging the Bitcoin in the hands of users, the income has been locked in advance, because Bitcoin assumes the functions of gold and US dollars in the currency circle.
However, BISS is only a smaller exchange after all. Once the regulatory authorities direct their efforts to rectify the currency circle at digital currency exchanges, it means that greater uncertain risks are about to come.
On the evening of November 13, Binance’s official Weibo showed that the account was no longer viewable because it violated laws and regulations and the “Weibo Community Convention.” It is worth noting that when Binance’s official Weibo was blocked, the content displayed in its account and the number of fans were also cleared. Some insiders believe that Binance may have received relatively severe penalties this time.
On the afternoon of November 20, Huobi China’s Weibo account was blocked. This was the second Weibo account to be tricked after Binance’s official Weibo account was blocked on the evening of November 13. Industry insiders pointed out that the blocking of Huobi China’s Weibo account was more serious than the blocking of Binance’s official Weibo account a few days ago, indicating that the regulatory actions launched in Shanghai on November 14 have been extended to the whole country, at least to Beijing.
A digital currency analyst in Shenzhen believes that one of the reasons why Binance was blocked may be that the company openly announced that it would open legal currency transactions. On October 9, Binance announced the launch of OTC fiat currency trading services on the Android version of the app. Shortly thereafter, Binance founder Changpeng Zhao stated on Twitter that users would soon be able to use WeChat and Alipay to purchase cryptocurrencies on the OTC market. After the news was released, Binance Coin issued by Binance Exchange began to rise, with the largest intraday increase of more than 10%. This increase was Binance's largest intraday increase since May 21 this year.
It seems that only OKEX is more compliant? OKEX, an exchange headquartered in Beijing, announced at the end of 2017 that after the regulatory authorities issued an ICO ban, it would stop all RMB-to-Bitcoin transactions and transfer all its business to the overseas site OKEX.
However, not providing legal currency trading services does not mean that there is no cutting of leeks. Brokerage China reporters have obtained multiple videos of investors going to OKEX to defend their rights. OKEX is also considered to be one of the companies with the most records of investor rights protection. Brokerage China reporters also learned on the 21st that OKEX's alleged "misappropriation" of customer funds has been officially filed in the Hangzhou Internet Court recently.
This wave of sweeps by regulatory authorities since the end of October has caused many small and medium-sized investors in the currency circle to begin to consider risk control.
A digital currency investor in Shenzhen told a reporter from Brokerage China that he and some friends have been selling digital currencies one after another since October. The number of digital currency assets held has dropped by half compared to June this year. In particular, the assets stored in some risky digital currency exchanges have been sold out, and he is worried that something will happen.
The digital currency market is bleak
After the heavy blows of regulatory authorities in recent days, the digital currency market has been bleak. On the afternoon of November 22, the digital currency market suddenly plummeted across the board.
Bitcoin plunged 11% intraday on November 22, once falling below 7,000 US dollars, and the circulating market value of Bitcoin also fell below 1 trillion yuan. This was the largest single-day decline for Bitcoin since the regulatory launch of Bitcoin at the end of October this year, and its decline in three weeks was close to 30%.
Trading data shows that on the evening of November 22, the top 100 companies by market capitalization Of the digital currencies, more than half of the currencies have fallen by more than 10% intraday, and more than 90% of the varieties have suffered financial suppression. After the regulatory authorities rectified the currency circle, the OKEX digital currency exchange, which was trapped in the "customer funds gate", also encountered greater market pressure. The OKB issued by it has experienced six consecutive declines. On November 22, the intraday decline reached 15%, and the decline in the past three weeks reached 30%.
The above information means that the regulatory authorities are strongly attacking, or confirm that the regular army is expected to completely replace the existing currency ecosystem, including the three major digital currency exchanges that store a large number of users' funds. Once they fail to obtain operating licenses issued by regulatory authorities, they may face the fate of being banned. The risk appetite of digital currency investors has dropped sharply. As investors' willingness to hold currency has been significantly reduced, the pressure to sell funds has also increased, leading to a collapse in currency prices.
The central bank’s digital currency recruitment staff will have a monthly salary of at least 50,000?
Not long after the regulatory authorities launched a forceful attack, a recruitment message hinted that the currency circle’s anti-bandit operation was preparing for the entry of the regular army.
The Yangtze River Delta Financial Technology Co., Ltd., a subsidiary of the People's Bank of China, recently released recruitment information for 2019. According to the official introduction, the Yangtze River Delta Financial Technology Co., Ltd. is a financial technology company established by the Central Bank's Digital Currency Research Institute and relevant units in Suzhou. It will undertake the construction and stable operation of legal digital currency infrastructure; undertake key technical research and pilot scenario support, supporting R&D and testing of legal digital currency; focus on the cutting-edge directions of financial technology such as blockchain and cryptography.
According to the main recruitment positions of Yangtze River Delta Financial Technology Co., Ltd., they mainly include data center managers, security and cryptography research specialists, senior network engineers, architects (platform, mobile), blockchain technology directors, blockchain architects, blockchain R&D engineers, big data R&D engineers, etc. It is reported that these positions have a minimum monthly salary of 50,000.
It is worth mentioning that at the 2019 China Economy 50 Forum held in Shenzhen, Zhu Min, dean of the National Institute of Financial Research at Tsinghua University, spoke on November 22 and believed that if digital currencies are not issued, central banks of various countries will face great pressure, including pressure from the market. Various cryptocurrencies are currently emerging in the market. Although these cryptocurrencies are not sovereign currencies, they are actually eroding the field of sovereign currencies. The central bank of some small countries is particularly worried that if it does not issue a digital currency, the sovereign currency of the host country is likely to be marginalized.
Huang Yiping, deputy director of the National School of Development at Peking University, believes that mastering the global digital currency will have a great influence on the global payment and monetary system. Not only the central banks of various countries will participate in the competition, but also some less formal non-governmental organizations and institutions. He believes that the People's Bank of China is well prepared for research and is likely to become the first to officially issue a central bank digital currency.
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