What are the legal consequences of virtual currency mining in China?

Summary

This article discusses the different modes of “opening a virtual currency mine” and “home mining”; whether it must “consume electricity and energy” for mining; In September, the People’s Bank of China and ten ministries and commissions issued the “Notice on Further Preventing and Disposing of Hype Risks in Virtual Currency Transactions” to demonstrate “Illegal financial activities” in the “Notice on Further Prevention and Handling of Hype Risks in Virtual Currency Transactions” to demonstrate “What are the legal consequences of virtual currency mining in China?

Under the situation of domestic regulatory policies to rectify virtual currency “mining” activities, various local government supervision departments quickly took action to investigate and eliminate virtual currency “mining” projects. Mining machines” were confiscated or even fined and other administrative penalties, and some “miners” who bought a few “miners” and put them in their homes to “mine” were also investigated and punished and required to sign a letter of guarantee or commitment, and the guarantee/commitment was not carried out. Virtual currency “mining” activity!

So is the virtual currency “mining” activity illegal? What are the legal consequences? We have sorted out the laws, administrative regulations and normative documents that can be applied to deal with virtual currency “mining” behavior mainly as follows:

  1. “Administrative Punishment Law of the People’s Republic of China (2021)”, “Energy Conservation Law of the People’s Republic of China (2018)” (hereinafter referred to as “Administrative Punishment Law” and “Energy Conservation Law”);
  2. “Decision of the State Council on Promulgating and Implementing the Interim Provisions on Promoting Industrial Structure Adjustment (Guo Fa [2005] No. 40)” (hereinafter referred to as “2005 Decision”), issued on December 2, 2005;
  3. “Notice of the National Development and Reform Commission and other departments on rectifying virtual currency “mining” activities (Fa Gai Yun [2021] No. 1283)” (hereinafter referred to as “924 Notice”), issued on September 24, 2021;
  4. “Decision of the National Development and Reform Commission on Amending the Guidance Catalogue for Industrial Structure Adjustment (2019 Version) (Order No. 49 of 2021)” (hereinafter referred to as the “2021 Decision”), issued on December 30, 2021.

How to correctly understand and apply the “924 Notice”?

Since the release of the “924 Notice”, the notice has become an important basis for various regulatory authorities to investigate and deal with virtual currency “mining” activities, so are all virtual currency “mining” activities, including the “mining farm” project that existed before the notice was issued Or personal “mining” behavior can be investigated and punished in accordance with the relevant provisions of the notice? We believe that all virtual currency “mining” behaviors cannot be investigated and punished with the idea of ​​”one size fits all”, and should be differentiated, treated differently, and dealt with in accordance with the law, for the following reasons:

First, it pointed out that the fundamental reason for investigating, punishing and eliminating virtual currency “mining” activities is ” large energy consumption and carbon emissions , …, coupled with the increasingly prominent risks derived from virtual currency production and trading, blindly Disorderly development has adverse effects on promoting high-quality economic and social development and energy conservation and emission reduction.” Then individuals buy a few “mining machines” or “graphics cards” and “mining” at home will obviously not cause a lot of power consumption and carbon emissions. Combined with the provisions of the full text of the notice, it can be seen that the main object of investigation should be large-scale “mining”. Farm” or enterprise “mining” .

Second, the second item clarifies the basic principles that should be adhered to in the investigation and punishment of virtual currency “mining” activities: classified treatment , distinguishing virtual currency “mining” increments and existing projects, prohibiting new additions, and accelerating the orderly withdrawal of existing projects. Therefore, when local regulatory authorities investigate and deal with virtual currency “mining” activities, they cannot implement “one size fits all” and directly impose administrative penalties such as confiscation or fines.

Third, Article 3 of the notice clarifies that in the rectification of virtual currency “mining” activities, the object of sorting out and investigating the stock projects of virtual currency “mining” is enterprises , and individual “mining” is not the object of investigation, but this does not It means that personal “mining” regardless of the size of the “mine” is not an object of investigation, nor is it an illegal act. We will analyze this at the end.

Fourth, how to “orderly exit” the stock projects of virtual currency “mining”? Item 17 and Item 13 of Article 5 of the notice stipulate that, according to the “Industrial Structure Adjustment Guidance Catalog”, to eliminate within a time limit, and within the specified “elimination period”, differential electricity prices will be implemented for existing projects, and “elimination-type” enterprise electricity prices will be implemented. , the price increase standard is 0.30 yuan per kWh, and the local government can further increase the price increase standard according to the actual situation. For enterprises that are not eliminated on time, they shall be ordered to suspend production or be closed in accordance with relevant national laws and regulations. Therefore, for the enterprise “mining” projects that were in stock before September 24, 2021, the regulatory authorities can stipulate a reasonable period for clearing and withdrawing electricity. Within the specified period, the electricity price can be increased, but administrative penalties such as confiscation and fines shall not be imposed. Otherwise, it is an administrative violation.

get?code=MTEwZjk5MTlhZjNiZTZkNDc4YTcxNWQ5ZDM0NTkyYzcsMTY1MTA0NDA0NDkxOQ==

(source baidu)

How to connect “924 Notice” and “2005 Decision”

Article 4, item 7 of the “924 Notice” stipulates that “mining” activities of virtual currency are listed as eliminated industries. Added “Virtual Currency ‘Mining’ Activity” to the “Industrial Structure Adjustment Guidance Catalogue (2019 Edition)” “elimination category”. Before the addition and listing, the virtual currency “mining” project will be treated as an eliminated industry, which is prohibited in accordance with the relevant provisions of the “Decision of the State Council on Promulgating and Implementing the “Interim Provisions on Promoting Industrial Structure Adjustment” (Guo Fa [2005] No. 40). invest.

This article clarifies that on December 30, 2021, the National Development and Reform Commission issued the “2021 Decision” to formally revise the “Industrial Structure Adjustment Guidance Catalogue (2019 Version)” before listing the virtual currency “mining” project as a phase-out industry, the “2005 Decision” shall apply. “The relevant prohibition on investment deals with virtual currency “mining” projects.

The “2005 Decision” (“Interim Provisions on Promoting Industrial Structure Adjustment”) is an administrative regulation in terms of effectiveness . Paragraph 2 of Article 12 of this Law stipulates that “The Guiding Catalogue of Industrial Structure Adjustment shall be formulated by the National Development and Reform Commission and the relevant departments of the State Council in accordance with the relevant laws and regulations of the state, and shall be published after the approval of the State Council.” Therefore, the “Industrial Structure Adjustment Guidance Catalog (2019 Version)” is a departmental regulation in terms of effectiveness and must be revised in accordance with legal procedures. Paragraph 3 of Article 12 stipulates that “In principle, the “Industrial Structure Adjustment Guidance Catalogue” is applicable to all kinds of enterprises within the territory of my country. Therefore, the main object of application is the “mining” behavior of enterprises.

Article 19 of the “Decision 2005” stipulates that investment is prohibited for phase-out projects. … All regions, departments and relevant enterprises should take effective measures to eliminate them within a prescribed time limit. During the phase-out period, the national price authority may increase the price of electricity. … For enterprises that do not eliminate production technology, equipment and products on schedule, local people’s governments at all levels and relevant departments shall order them to suspend production or close them in accordance with relevant national laws and regulations.

From the above analysis, it can be seen that the ” Industrial Structure Adjustment Guidance Catalogue (2019 Edition)” applies to enterprises, and regulates the behavior of enterprises. Before the revision by the National Development and Reform Commission, the provisions of Article 19 of the “Decision of 2005” were applicable, prohibiting investment, and enterprises that have invested The “mining” projects listed in the catalogue will be eliminated within a time limit, and enterprises that are not eliminated on time will be ordered to suspend production or close down according to law; after the revision by the National Development and Reform Commission, the enterprise “mining” projects will be handled in accordance with the relevant laws and regulations of the industry to which the catalog belongs; personal “mining” behavior The provisions of the “Industrial Structure Adjustment Guidance Catalogue (2019 Edition)” on eliminated industries, nor the provisions of relevant industry laws and regulations, do not apply. If virtual currency “mining” is a phase-out industry according to the “Industrial Structure Adjustment Guidance Catalogue (2019)”, “mining machines” are regarded as energy-using equipment that has been explicitly eliminated by the state, and the seventh “Energy Conservation Law” shall apply. Article 11 imposes penalties, then the object of punishment is limited to enterprises, not individuals.

Is personal “mining” a crime?

Is personal “mining” illegal?

Above, we analyzed that according to the “Industrial Structure Adjustment Guidance Catalogue (2019 Edition)”, “mining” is a phased-out industry, and “mining machines” are regarded as energy-using equipment that has been explicitly eliminated by the state, and the “Energy Conservation Law” is applicable. Article 71 Administrative penalties are imposed, and the object of penalty is limited to enterprises, not individuals. So is personal “mining” illegal? What are the basis for punishment?

Administrative supervision policies such as the “924 Notice” clearly regulate virtual currency “mining” activities. The supervision policy belongs to the administrative management order. Individuals and enterprises that continue to carry out “mining” activities after the “924 Notice” is issued are deliberately violating the administrative management order. , according to the provisions of Article 4 of the “Administrative Punishment Law”, the administrative organ shall impose punishment according to law. However , when making punishments , attention should be paid to the statute of limitations and the “principle of non-retroactivity of the law” , that is, only the actions that continue to be implemented after the notice is issued, but not the actions before the notice is issued.

Therefore, when local regulatory authorities apply the “924 Notice” to investigate, punish, and eliminate virtual currency “mining” activities, should they distinguish between existing projects or new projects according to law? Is it corporate mining or personal mining? Is it a large-scale “mine” or just a few “miners” or computer graphics cards? Before making an administrative penalty decision, it should be strictly defined whether the punished object is the legal object of accountability, and whether the punished behavior is a legal violation.

Especially when investigating and punishing personal “mining” behavior, it should be more accurately defined whether it reaches the level of administrative punishment? Even if administrative penalties should be imposed in accordance with the law, Article 71 of the Energy Conservation Law should not be applied mechanically or even erroneously, regardless of the nature of the act, the consequences of the violation and the degree of damage, or whether the object of application is correct or not. The administrative punishment of confiscation is generally given, but the provisions of Article 9 of the “Administrative Punishment Law” should be applied first, and administrative punishments such as warnings, circulars of criticism, and fines should be given. Heavier confiscation penalties.

If no matter whether individual “mining” or enterprise “mining”, regardless of the size of the “mine”, regardless of the number of “mining machines”, etc., the administrative penalty of confiscation shall be imposed, and the “one-size-fits-all” approach shall be implemented, then the administrative penalty shall be decided. It not only violates the basic administrative principles such as proportionality principle and minimal damage, but also is suspected of administrative violations, and cannot reflect the impartiality, fairness, legality, and rationality of administrative law enforcement . Right to Remedy.

Is personal “mining” a crime?

Article 5, item 16 of the “924 Notice” stipulates that “severely crack down on all kinds of illegal fund-raising and illegal securities issuance in the name of virtual currency ‘mining'”, and the use of virtual currency “mining” to carry out various criminal activities will inevitably lead to Under criminal sanctions, is the simple personal “mining” behavior suspected of illegal business operations?

Article 225 of the Criminal Law provides for the crime of illegal business operations:

Whoever, in violation of state regulations, commits one of the following illegal business operations, disrupts the market order, and the circumstances are serious, shall be sentenced to fixed-term imprisonment of not more than five years or criminal detention, and concurrently or solely be sentenced to a fine of not less than one time but not more than five times the illegal income; Fixed-term imprisonment of not less than five years, and a fine of not less than one time but not more than five times the illegal gains or confiscation of property.

(1) Dealing in franchised or monopoly items prescribed by laws and administrative regulations or other items restricted from sale without permission; or approval documents; (3) illegally engaged in securities, futures, insurance business without the approval of the relevant competent authorities of the state, or illegally engaged in fund payment and settlement business; (4) other illegal business operations that seriously disrupt the market order.

According to the above-mentioned provisions of the Criminal Law, the business operation of the crime of illegal business operation is a business operation that requires the special permission of the government supervision department to carry out business activities as stipulated by laws and administrative regulations. business crime. In addition, if it is a business operation prohibited by laws and administrative regulations, it is also suspected of illegal business operation. So whether personal “mining” behavior is “illegal business behavior”?

The virtual currency “mining” behavior belongs to the eliminated industries stipulated in the “Interim Regulations on Promoting Industrial Structure Adjustment” (“2005 Decision”, Administrative Regulations) and “Industrial Structure Adjustment Guidance Catalogue (2019 Version)” (departmental regulations in nature). , that is, an industry that is prohibited from operating, so the behavior of virtual currency “mining” is prohibited by administrative regulations . However, “mining” behavior is not a “business behavior”. At present, the current effective laws and administrative regulations in my country do not give a clear definition of “business behavior”. We refer to the provisions of Article 3 of the “Consumer Rights Protection Law”. It can be seen that business behavior refers to the provision of goods or services, and the process of “mining” is to “produce” virtual currency, which is similar to the production of goods, and my country’s current effective laws, regulations and regulatory policies have not clearly recognized virtual currency as a commodity or virtual currency. commodity.

Therefore, “mining” behavior, including personal “mining” and corporate “mining”, are not illegal business activities and do not constitute illegal business operations.

get?code=M2JmZjRmMDAwOTc4NDBhMDBiZDA1MmQyNTZlYTNiYWQsMTY1MTA0NDA0NDkyMA==

(source baidu)

Some provincial government development and Reform Commission regulations on virtual currency “mining”

Inner Mongolia Autonomous Region

On May 18, 2021, the Inner Mongolia Autonomous Region Energy Consumption Dual Control Emergency Headquarters Office issued the “Announcement on Establishing a Reporting Platform for Virtual Currency “Mining” Enterprises, fully accepting petition reports on virtual currency “mining” enterprises, and announced How to report.

On May 26, 2021, the Development and Reform Commission of Inner Mongolia Autonomous Region first issued the “Eight Measures on Resolutely Crackdown and Punishment of Virtual Currency “Mining” (Draft for Comments)” to deal with various illegal acts involving virtual currency “mining” enterprises and individuals. Penalties are based on public consultation.

On January 20, 2022, the Development and Reform Commission of the Inner Mongolia Autonomous Region and the Department of Industry and Information Technology jointly issued the “Notice on Implementing Differential Electricity Price Policy for Virtual Currency “Mining” Electricity (Nei Fa Change Price Fee Zi [2022] No. 115)”, which stipulates:

  1. The virtual currency “mining” project is included in the implementation scope of the differential electricity price policy, and the electricity price of “elimination-type” enterprises is implemented, and the price increase standard is 1 yuan per kWh;
  2. Virtual currency “mining” projects are prohibited from participating in electricity market transactions. Prohibit virtual currency “mining” projects from enjoying the benefits of the electricity market in any way;
  3. Unauthorized access to power supply lines with low electricity prices for virtual currency “mining” is prohibited.

At present, the Inner Mongolia Autonomous Region Development and Reform Commission and other departments have not issued relevant normative documents on cracking down on virtual currency “mining”. The investigation, punishment and removal of “mines” within their jurisdiction are in accordance with the “924 Notice” formulated by the National Development and Reform Commission and other relevant regulations.

Zhejiang Provincial Development and Reform Commission

On February 14, 2022, the Zhejiang Provincial Development and Reform Commission issued the “Notice on Matters Concerning the Implementation of Differential Electricity Price Policy for Virtual Currency “Mining” Electricity (Zhe Fa Gai Price Letter [2022] No. 69)”, which stipulates:

  1. The electricity used for virtual currency “mining” is subject to differential electricity prices, and the price increase standard is 0.50 yuan per kWh;
  2. For the same electricity user, if there is a mix of virtual currency “mining” electricity and other electricity consumption, the differential electricity price policy will be implemented for all electricity consumption.

On March 29, 2022, the Zhejiang Provincial Development and Reform Commission and the Department of Justice jointly issued the “Notice on Rectifying Virtual Currency “Mining” Equipment (Zhefa Gai Energy [2022] No. 77)”, which stipulates:

  1. “Mining” equipment includes electronic computing equipment (such as graphics cards, motherboards, etc.), “mining” software and mining pool access records, including but not limited to Field Programmable Gate Array (FPGA) mining machines, Central Processing Unit (CPU) mining machines machine, graphics card (GPU) mining machine, application-specific integrated circuit (ASIC) mining machine, etc.;
  2. In accordance with the relevant provisions of the “Industrial Structure Adjustment Guidance Catalog (2019 Version)” and the “Energy Conservation Law”, the virtual currency “mining” equipment will be immediately stopped and confiscated according to law. If an enterprise participates in virtual currency “mining” activities and the circumstances are serious, it shall report to the people’s government at the same level to order it to suspend business for rectification or close down in accordance with the authority stipulated by the State Council.

Article 1 of the notice provides an enumerated definition of “mining” equipment, that is, the definition of “mining machine”, which is different from the definition of “mining” activity in the “924 Notice” issued by the National Development and Reform Commission, a higher-level normative document. , it is uncertain whether its definition of “mining machine” exceeds the definition of “mining” activities in the “924 Notice”;

Article 2 of the notice stipulates that in accordance with the relevant provisions of the “Industrial Structure Adjustment Guidance Catalog (2019)” and the “Energy Conservation Law”, the virtual currency “mining” equipment will be immediately stopped and confiscated according to law. Mining” activities are directly subject to the administrative penalty of confiscation of “mining machines” , which is contrary to the principle of differentiated treatment stipulated in the “924 Notice” of the National Development and Reform Commission, and does not conform to the principle of appropriate punishment according to the severity of the violation. Reflect the rationality of the administrative penalty decision.

Hainan Development and Reform Commission

On December 3, 2021, the Hainan Provincial Development and Reform Commission issued the “Notice on Issues Concerning the Implementation of Differential Electricity Price Policy for Virtual Currency “Mining” Electricity Use, which stipulates:

  1. The virtual currency “mining” activity is listed as a phase-out industry, and differential electricity prices are implemented, and the price increase standard is 0.80 yuan per kilowatt-hour;
  2. Virtual currency “mining” users are not allowed to directly participate in electricity market transactions, and virtual currency “mining” users are not allowed to enjoy the benefits of the electricity market in any way (cannot enjoy electricity price subsidies).

In addition to the above-mentioned notices, the Hainan Provincial Development and Reform Commission and other departments have not issued relevant normative documents on the investigation and removal of virtual currency “mining” activities. The processing of virtual currency “mining farms” within their jurisdiction is based on the “924 Notice” formulated by the National Development and Reform Commission. and other relevant regulations.

Sichuan Development and Reform Commission

On February 17, 2022, the Sichuan Provincial Development and Reform Commission issued the “Announcement on the Announcement of Rectifying the Reporting Methods of Virtual Currency “Mining” Activities , encouraging the reporting of relevant clues about virtual currency “mining” activities and publishing the reporting methods.

On April 15, 2022, the Sichuan Provincial Development and Reform Commission issued the “Notice on Intensifying Rectification Efforts to Implement Differential Electricity Prices for the Practical Electricity of the Shutdown of Virtual Currency “Mining” Projects (Sichuan Development and Reform Price Regulation [2022] No. 186)” stipulates:

  1. Different electricity prices will be implemented for various types of electricity consumption of virtual currency “mining” activities. The price increase standard is 2 yuan per kilowatt-hour. The measurement time starts from the date of the start of the “mining” activity (the start date is determined before the date of issuance of this notice). , the measurement time starts from the date of posting) and ends on the day when the “mining” activity is terminated;
  2. This notice shall come into force from the date of issuance and shall be valid for 5 years.

In addition to the above notices and announcements, the Sichuan Provincial Development and Reform Commission and other departments have not issued relevant normative documents on the investigation and removal of virtual currency “mining” activities. Notice” and other relevant provisions.

Except for the above-mentioned four provinces, the regulatory authorities of other provinces have not issued relevant normative documents specifically applicable to the regulation of the “mining” activities of the proposed currency, and the processing of virtual currency “mining” activities in their jurisdictions is mainly based on the “924” formulated by the National Development and Reform Commission. Notice” and other relevant provisions.

write at the end

In response to virtual currency “mining” activities, the National Development and Reform Commission and other departments and provincial government supervision departments have issued a series of investigation and removal policy documents. Administrative organs should accurately refer to relevant laws and regulations when investigating, punishing and withdrawing virtual currency “mining” projects, and make legal and reasonable administrative punishment decisions according to the nature of the behavior and the severity of the consequences of violations, avoiding “sporty” law enforcement and “one size fits all”. “Enforcement, in the process of administrative enforcement, attention should also be paid to protecting the legitimate rights and interests of the parties.

Combined with the relevant laws and regulations such as the “924 Notice”, we analyze in this article the illegal subjects of virtual currency “mining” behavior and the applicable administrative punishment methods , as well as personal “mining” behavior in general should not be directly applicable The provisions of Article 71 of the Energy Law impose administrative penalties such as confiscation of equipment.

We still strongly recommend that “miners” should actively support and respond to the policies of government regulatory authorities at all levels to investigate and punish virtual currency “mining” activities in accordance with the law, and actively cooperate with regulatory authorities at all levels to remove “mining” equipment as soon as possible and “mine farms”, fully aware that the purpose of the regulatory authorities to resolutely investigate, punish and remove virtual currency “mining” projects is to protect citizens’ property rights and public interests, and be highly vigilant against fraud and illegal use of virtual currency “mining” activities. Fundraising and other illegal and criminal activities to avoid property damage.

The author of this article: Attorney Liu Lei

Master of Laws, head of the “Digital Economy and Fintech Legal Service Team” of Beijing Yingke (Shanghai) Law Firm. Won the honorary titles of “Top Ten Future Stars” of Yingke Headquarters; “New Decade · Ten Youths” representative of Yingke (Shanghai) and other honorary titles.

Focus on legal practice and theoretical research in emerging fields such as blockchain, virtual currency, data compliance, foreign trade and foreign exchange, fourth-party payment, anti-money laundering, mobile Internet, etc. Bank” and “Asia-Pacific Investment Bank” have provided professional legal services, and published academic papers such as “On the Protection of Flawed Frozen Persons in Telecom Network Fraud” and “The Dilemma of Identifying the Attribute of Private “Digital Currency” in Judicial Practice and Countermeasures Analysis.

He is also a researcher at the Institute of Artificial Intelligence and the Rule of Law of Gansu University of Political Science and Law, and a member of the expert database of GLG Group. Smart lessons are taught.

Posted by:CoinYuppie,Reprinted with attribution to:https://coinyuppie.com/data-crypto-startups-raised-25-2-billion-last-year-up-713-from-the-year-before/
Coinyuppie is an open information publishing platform, all information provided is not related to the views and positions of coinyuppie, and does not constitute any investment and financial advice. Users are expected to carefully screen and prevent risks.

Like (0)
Donate Buy me a coffee Buy me a coffee
Previous 2022-04-27 09:23
Next 2022-04-27 09:26

Related articles