Three Associations Issue Warning as Bitcoin Falls Below $40,000, What Does an Announcement by an Industry Association Mean?

The announcement issued by China’s three heavyweight associations to prevent the risk of speculation breaks off the infrastructure for domestic residents to trade frequently in virtual coins, and plays a positive control role in controlling mainland residents’ speculation in coins, and I think the effect is immediate.

Three Associations Issue Warning as Bitcoin Falls Below ,000, What Does an Announcement by an Industry Association Mean?

On May 18, the China Internet Finance Association, China Banking Association and China Payment Clearing Association jointly issued the “Announcement on Preventing the Risk of Speculation in Virtual Currency Transactions”, which required financial institutions and payment institutions not to conduct business related to virtual currency.

Once the news came out, there was an immediate reaction from the cryptocurrency market. As of around 12:30 on the 19th, Bitcoin fell below $40,000 and Ether fell below $3,000 and continued to fall, dropping by more than 12% in 24 hours. Exchange bitcoin reserves have continued to rise since reaching their lowest point on April 18, indicating that some investors are engaging in selling operations.

According to bybt real-time data, as of 12:45 on May 19, the network-wide exchange BTC long-short ratio was 46.52%:53.48%, with the short side taking the dominant position. In the past 1 hour the whole network exploded $641 million, and the number of exploded positions exceeded 237,000.

The industry is very concerned about whether the announcement represents the official attitude and what impact it will have on the subsequent development of the cryptocurrency market. After the announcement was issued, Xiao Za, a lawyer who has been following the cryptocurrency circle, immediately made an interpretation.

Virtual coins are not fiat money, but erode the survival space of national fiat money

As we all know, virtual currencies are not legal tender and have no national credit backing, so they are not fiat currencies. However, virtual currency essentially has the functions of (1) medium of exchange, (2) unit of account, and (3) store of value (FATFA’s functions of virtual currency are summarized), and becomes a medium of value exchange.

These functions are enough to cause alarm in the traditional financial world, as the British banker Meyer Rothschild once said. Rothschild once said, “As long as I can control the issuance of a country’s currency, I don’t care who makes the laws.” From the judgments of China, South Korea, the United States, Japan and other countries collected by Sara, there have been criminal cases, mostly focused on fraud, illegal fund-raising, illegal issuance of securities, etc. Among them, a large number of criminal cases in China have also appeared in the crime of organizing and leading pyramid schemes, which has seriously affected the order of social management, involving many people and a particularly large amount of money, and the social harm is obvious.

Throughout the history of money and finance, the influence of the monetary system on the country is fundamental, and can even directly transform the relations of production and influence the direction of social development. Therefore, it is appropriate for countries to maintain a vigilant and regulatory attitude towards the virtual money that has become a climate (especially when it becomes a payment and settlement tool connected to real-world wealth).

Cutting off the support of traditional finance

On the surface, it appears that virtual currencies have emerged to replace traditional financial institutions and payment providers, and have been committed to escaping from the mainstream financial system since the “crypto-punk” era.

From this logic, the relationship between virtual currencies and traditional financial institutions seems to be antagonistic, but the actual situation is not theoretically inferred. Banks, trusts, insurance, securities, futures, and third-party payments are also interested in the “high risk and high return” of virtual currencies, and there are many traditional financial institutions that actively or passively provide accounts or circulation for virtual currency transactions. With the pressure of anti-money laundering and other regulatory requirements, some time ago a letter bank issued a statement banning virtual coin trading.

Lacking traditional financial institutions, the technical threshold of virtual coins still directly affects the number of participants. It is becoming increasingly difficult to exchange fiat currency for digital coins, and it is difficult for people who have made money in the cryptocurrency world to exchange coins for RMB. In the exchange stalls in Hong Kong observed by Sara, there were even cases of bitcoin being robbed on the spot after being exchanged for fiat currency. The company’s main goal is to make sure that the company’s infrastructure is not overflowing, so that the pool of virtual coins will not be so full, reducing the possibility of becoming a weir.

The announcement specifically mentions that no “indirect” virtual currency services should be provided to customers, which indicates that: (1) penetrating regulation, surface articles do not affect the characterization; (2) prevent financial institutions from cooperating with other companies in virtual currency business to prevent the misuse of licenses; and (3) increase the compliance obligations of members to screen for currency-related services.

Why an association instead of a regulator

First of all, ICO is an illegal public financing act. In principle, since ETH, most virtual coins have been illegal financing tools from the beginning. In other words, the cryptocurrency industry itself is a gray industry, there is no so-called regulatory authority.
Secondly, the association is an industry self-regulatory organization, its announcement or statement does not have legal effect, but has important reference significance, especially in the civil judgment, the association’s announcement will be cited as “industry practice”, so it is foreseeable that in the future, virtual coin-related cases will be affected by this announcement.

Once again, the association’s announcement is a precautionary shot to let the public know the illegality of virtual coin speculation, and if things get better, then it will stop; if things get worse, the relevant hard law will come on the scene, so please make up the lessons from the P2P industry.

Response to the “card-breaking” action

The veterans of the cryptocurrency industry laughingly say that if you have not been frozen, you are not a cryptocurrency person. Indeed, in the past two years, many people have received “black money” (involving upstream crimes) for trading virtual coins, and Sara has written an article analyzing how to deal with the problem after freezing accounts.

Financial institutions become frozen cards, depositors and the authorities to establish contact bridge, the general bank will tell, your account was a certain city in a certain province police to suspicion XX frozen, at this time, the depositor will generally take the initiative to contact the police to ask the case, in the case of a clear explanation, a relatively short period of time can be unfrozen, but many people simply can not explain the situation, then we have to wait for the end of the upstream crime trial, and then send back The financial institution also bears a large burden. For this reason, financial institutions are also under greater pressure, depositors a variety of complaints and complaints. Once this announcement is made, financial institutions can justifiably add a clause to the contract: accounts used for virtual currency speculation, refuse to provide you with services.

Will the announcement affect the price of coins?

The actual fact is, the price of coins is as treacherous as the stock market, and Sara can’t say. However, Musk claimed to buy a certain car to accept bitcoin payment, and later slagged off a handful, refusing to pay in virtual coins, causing the price of the currency to fall wildly.

My real feeling is: Ma curry used a very strong reason, he talked about environmental protection, in the current carbon neutral, environmental protection is the global common governance problem. Bitcoin’s power consumption problem is like a tick on a bald man’s head. If one day BTC plunges, it could be a global siege in the name of environmental protection.

Of course, as the bearer of the mining world, the Chinese have a real impact on the cryptocurrency world. China’s three heavyweight associations issued the prevention of speculation risk announcement, cut off the infrastructure of the domestic residents of frequent transactions of virtual coins, for the control of mainland residents speculation played a positive control role, I think the effect is immediate.

As to whether these blockades and regulations will push up or depress coin prices, it is impossible to predict, perhaps the situation will become: the senior ones play deeper and the whites run out of ideas.

Posted by:CoinYuppie,Reprinted with attribution to:
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.

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