According to media reports, on October 20, 2021, the first Bitcoin ETF (Exchange Traded Fund) “ProShares Bitcoin Strategy ETF” approved by the US Securities and Exchange Commission (SEC) was listed and traded on the Nasdaq under the trading code “BITO “, its products are based on Bitcoin futures contracts rather than Bitcoin spot.
Proshare CEO Michael L. Sapir said in a statement, “BITO has opened a simple and convenient way for many investors who have economic accounts and combined investment in ticket purchases and funds to access Bitcoin. Investors no longer have to learn the tedious process of setting up a Bitcoin account with a Bitcoin provider, creating a Bitcoin wallet, and then worrying about the security risks of those providers who are not regulated.”
In the following two days, the SEC approved two other Bitcoin ETFs, and more than a dozen other asset management agencies are also waiting in line for the SEC to review similar products. The market generally believes that the issuance and transaction of Bitcoin ETF products is a key step for cryptocurrency to further move toward compliance and enter the mainstream .
The Bitcoin white paper believes that Bitcoin is a kind of electronic cash. The “Announcement on Preventing Bitcoin Risks” issued by five ministries and commissions including the Central Bank of China in 2013 considered Bitcoin to be a virtual commodity. In 2017, the Bitcoin futures listed by CME Group and the Bitcoin futures ETF approved by the US SEC regard Bitcoin as a commodity. Whether electronic cash, virtual goods or bulk commodities, they are all assets.
In recent years, the digital economy has developed rapidly. In particular, the widespread application of blockchain technology has led to the continuous emergence of new digital assets, but there has not been a consensus on the connotation, basic characteristics and supervision of digital assets. Bitcoin, as the first digital asset based on blockchain technology that enjoys a high degree of consensus, is significantly different from all previous assets, including electronic or digital assets that are similar in form, and has new inherent properties and application scenarios. We make a brief analysis based on the basic characteristics of new digital assets based on blockchain technology, and then discuss the laws of digital asset supervision including NFT items .
Basic characteristics of digital assets
Digital economy refers to the use of data as the key production factor, modern information network as the main carrier, the integrated application of information and communication technology, and the digital transformation of all factors as an important driving force, with the main purpose of promoting the efficiency improvement of economic activities and the optimization of economic structure. Digital assets based on blockchain are a typical embodiment of the integration of economic digitization, networking, and intelligence.
(1) Digitization is a form of existence of digital assets
Digital assets rely on digital carriers to exist. After years of continuous and rapid informatization, the form and function of information digital infrastructure has become more and more complete. Economic activities, social activities, and governance activities are increasingly based on modern information networks. The processing of digital information that exists in digital form is realized.
The digital asset issuance transaction process is a data processing activity process. However, the main reasons for the fact that the massive amounts of electronic data existed in the past have not realized the true meaning of assets. First, the data lacks credibility, and the information network is full of information data that is difficult to distinguish between true and false; second, data only exists in a certain link. A certain scenario of the process is not universal throughout the whole process of transaction activities, and cannot form a product or service with data as the core; third, data exists in different entities, and based on different specifications and standards, there is a complex interest relationship between each other As a result, the development and utilization of data communication integration is hindered, and it is difficult to realize convenient and fast data transaction flow.
On October 18, 2021, the Guangdong Province Data Assets Voucherization Launch Event and the First National Public Data Asset Voucher Release Conference will release the country’s first public data asset vouchers on-site. Guangdong Power Grid Corporation uses the public data asset vouchers as a carrier, through cloud computing, Domestic technologies such as big data and blockchain enable reliable, safe and efficient transmission of grid data to data users, greatly improving the efficiency of data circulation. Data asset certificates can be issued and traded as a form of digital assets through a series of data processing activities.
The integration and development of digital network technologies such as blockchain technology has enabled the entire process of economic, social and governance activities to be established in a trusted network environment. The authenticity, ubiquity and transaction convenience of data have been greatly improved, and the network is no longer available. Time and ubiquity, data generation and processing have become more and more ubiquitous. Blockchain technology accelerates the arrival of the era when electronic information and data become assets.
(2) Intelligence is the functional form of digital assets
Digital asset functions are developed based on codes. Whether it is constantly improving smart learning or smart transactions that cannot be changed after being triggered by conditions, the process of issuing, trading, and using digital assets is inherently dependent on pre-designed codes. Take Bitcoin as an example. Bitcoin sets basic parameters through its code, including attributes such as account mode, asset mode, transaction frequency, block size, total issuance quantity, peer-to-peer transmission, transaction accounting, and related script operation methods. , And around the code running on these chains, there have been many corresponding developments including browsers, wallets, etc. to cooperate with the operations on the chain. These code-based characteristics can still be adjusted and changed through the code based on consensus. numerous Bitcoin currency is based on this bifurcation direct, and Ethernet Square and other digital assets platforms also be adjusted to improve based on this model produced.
The intelligent application of digital assets is realized through various contracts. Digital asset issuance and transactions are embodied through various intelligent algorithms, and algorithms are embodied in a wide variety of contracts implemented through codes. Fundamentally speaking, the intrinsic properties, functions, and transaction methods of digital assets are reflected in various contracts, that is, with the help of contract digital assets, cross-program operations can be realized to achieve cross-subject and cross-scenario transfer of assets, and digital assets and applications can be realized. The close integration of procedures is the biggest feature that distinguishes it from previous assets in the form of electronic assets.
(3) Networking is a distinctive feature of digital assets
Digital assets have the attribute of public rights and interests. The publicity of digital asset rights and interests is embodied in two aspects. One is that the entire process of issuance, use, and transactions is built on public infrastructure, which does not belong to a specific institution or other subject; on the other hand, digital assets It can realize cross-scenario, cross-subject, cross-ecological, cross-program transfer and operation. Participants can fully reflect their individual characteristics and needs, can condense their wisdom and labor results, and can give the digital asset value and soul. This public attribute of digital assets is the logical and realistic basis for constructing the meta-universe.
Community-based operation is a distinctive feature of blockchain digital assets. Based on the digital assets under the condition of open source code, their operation and governance model show the characteristics of community. On the one hand, the operation of all aspects of digital assets presents a community nature. Program design developers are not necessarily asset issuers and value holders, asset users, asset traders, processing, promotion, trading and development of the inherent properties of assets, and related governance The problems all present the characteristics of an open community; on the other hand, the ecological development of digital assets and the expansion of application scenarios show community characteristics, and its ecological community autonomy, ecological richness, value superposition and other characteristics, community ecological development and interest incentives Out of a good positive cycle. The community operation characteristics of communities with a relatively high degree of decentralization, such as Bitcoin and Ethereum, are very significant.
In terms of governance, digital asset issuance and trading activities are embodied as decentralized applications with code and smart contracts as the core. The lower-level trading environment is continuously internalized and precipitated as trading infrastructure, and supervision is gradually focusing on decentralization. The distribution of related responsibilities and rights in the operation of the application program is scientific and reasonable. The corresponding requirements of legal supervision are largely based on codes and are implemented and supported by various participants in the community.
Supervision of NFT items
The digitization of commodities or items is an inherent requirement for the development of the digital economy. NFT technology agreement is an important tool for realizing the digitization of commodities, and is an indispensable primary element for the construction and development of the metaverse. NFT items have strong attributes of digital items, and the supervision of their issuance and transactions has attracted more and more attention.
(1) Whether NFT items meet the basic characteristics of digital assets
A typical NFT item should also conform to the basic characteristics of digital assets, such as digital existence, coding functions, and publicized community-based operations. At present, many NFT item design applications are still in their infancy, do not have the characteristics of typical data products, and have not been integrated with applications. The public attributes and community attributes of the products are not thorough. Improve the efficiency of the use of rights, optimize the rights model and improve The user experience is not satisfactory, and its operation mode and data storage method do not show typical publicity. On the contrary, many NFT items are trying to explore financial approaches at the beginning of their issuance, and metadata is always stored in the center. In the server, the typical logic for most buyers to hold NFTs is to wait for the appreciation, etc. At present, most NFT items on the market are still far away from the intrinsic attributes of the digital items required.
(2) Whether NFT items meet the requirements of financial supervision for full and true disclosure of information
Finance is a high-risk and strong supervision system. The basic feature of financial supervision is the licensing system. The fundamental reason is that financial instruments and financial operations have strong characteristics of centralized operation and intermediary operation. In the traditional financial system, financial operations and financial products are separated from physical activities and physical assets. Financial asset pricing has considerable centralization and intermediary characteristics. Therefore, strong supervision by regulatory agencies is required. The licensing system is a typical feature of modern financial supervision. From this perspective, we can find that all blockchain projects developed with traditional financing methods may receive high attention from financial supervision. The inner thinking is essentially the traditional financing model, so there is no reason to be treated differently by supervision.
As pointed out by Yao Qian, the first director of the Central Bank’s Digital Currency Research Institute, digital assets in the true sense should be native assets that contain full information and are displayed and circulated in digital form. Bitcoin embodies the characteristic of “full information” to a certain extent. The issuance of new digital assets represented by Bitcoin is based on a decentralized form, in which computing power, storage, data, etc. are exchanged for rights and interests. Its issuance or financing model shows strong vitality. The founding team is not like a traditional center. The chemical operation organization has the same strong control ability, and does not assume full responsibility for project development risks, nor does it enjoy comprehensive profitability for the project ecology. Naturally, it cannot be required to bear the same legal responsibilities as traditional supervision. From the perspective of the regulatory logic that is consistent with rights, responsibilities and interests, it is actually consistent with traditional supervision.
(3) Other supervision links of NFT items
Target participants. The supervision of participants usually includes the requirement that the relevant participants should have the identities, qualifications, and conditions required by law, as well as the requirement to protect the legitimate rights and interests of the relevant participants. On the one hand, the consistency of rights and obligations, risks and responsibilities are the basic principles of supervision. Whether it is decentralization or the participation of other applications, whether it is technology, finance, legal services or industrial applications, all participants should adhere to the principle of consistency of rights and obligations, and risks and responsibilities. For example, in a decentralized application scenario , each node or other centralized service provider should bear corresponding responsibilities and obligations. On the other hand, protecting the legitimate rights and interests of small and medium-sized users or consumers and investors is another principle of supervision. Regardless of whether it is a new business model or a traditional business model, or a mixture of the two, there may be problems in protecting the rights of small and medium-sized users or consumers, investors, to know, participation, choice, and investment rights, such as investment in project development. Financing, supervision of centralized exchanges.
For code and algorithms. Based on the public attributes of digital assets, digital asset issuance transactions rely more on codes and algorithms. In the supervision of the traditional Internet “big data” and other violations of legal rights, the transparency, ethical and normative review of algorithms has been In the beginning, this is precisely the consideration of safeguarding public interest and other related legitimate rights and interests. In the scenarios including OTC transactions and decentralized transactions, its codes and algorithms have also received regulatory attention. Although the regulatory policies of blockchain and digital currencies in various countries are not completely consistent, it is for example anti-money laundering, anti-terrorist financing and green environmental protection. The demands of public order and public interest are almost the same .
For trading assets. The core of asset supervision is whether the information of the assets involved in the transaction complies with the claimed legal requirements. For example, whether the NFT agreement truly realizes the rights and interests of related items has become the focus of supervision. In the development of the digital economy, it is inevitable that new business models will appear in the issuance and transaction of NFT items, new digital services and products, and new interest relationships will be formed. How to supervise these needs to be carefully screened in combination with specific scenarios.
For transaction methods. Whether the transaction methods developed for blockchain comply with legal requirements, such as products related to points, foreign exchange, electronic bills, and the application of RMB smart contracts, are the focus of regulatory review. When using technological innovation trading methods , regulatory agencies often pay more attention to protecting technology and innovation. On a controllable basis, we should create a relatively tolerant legal and regulatory environment for the application of technological innovation . The use of regulatory sandboxes is precisely this kind of thinking. When new trading methods have an impact on traditional markets, regulators often pay attention to balancing the business model innovation brought about by the application of new technologies with traditional businesses and mainstream businesses, and properly handle and coordinate the regulatory arbitrage that arises. (Regulatory arbitrage may not always be negative.) For example, some overseas regulatory agencies have taken this relationship into account to some extent in their compliance requirements for decentralized finance.
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