China doubles down efforts on virtual currency regulation

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China has enhanced supervision over virtual currencies to further fend off financial risks and forestall speculation in virtual currency businesses.

Bitcoin mining and trading-related activities will be cracked down upon, according to a statement from a meeting held last week by the financial stability and development committee under the State Council.

The meeting also stressed lowering credit risks and strengthening regulations on financial activities of platform enterprises.

The statement came days after three Chinese industrial associations vowed tougher restrictions on virtual currency trading.

Moreover, the statement is widely regarded as an escalation of China's virtual currency regulation, as the targets for supervision have expanded from bitcoin trading to mining. This escalation is conducive to the crackdowns on hype of virtual currency transactions from the root.

Financial institution members, payment institutions and other agencies shall not use virtual currency to price products or services, read an announcement of Chinese industrial associations of internet finance, banking, and payment and clearing.

Also, internet platform enterprises shall not provide services for virtual currency-related business activities.

It is also not allowed to underwrite insurance businesses related to virtual currencies or bring virtual currencies into insurance liability coverage, according to the announcement.

Virtual currency, a type of specific virtual goods represented by bitcoin, has no monetary properties. For example, it has no legal tender status, said Dong Ximiao, chief researcher with Merchants Union Consumer Finance Company Limited.

Participating in illegal bitcoin trading and speculation activities may lead to huge property losses for investors and affect China's financial stability and social order, Dong said, adding that such activities must be rectified.

 

Email: gaohan@nbd.com.cn

Editor: Gao Han