On May 21, the State Council Financial Stability Development Committee meeting gave clear requirements for “cracking down on bitcoin mining and trading practices”.
A. The regulation of “mining” has long been in place
Admittedly, China’s blockchain technology and digital coins brewed earlier, after 94 announcements coin exchange to the sea, ICO transfer to Singapore, countries try Howie test and regulatory sandbox, always Chinese are the bearer of the mining world. At the same time, the number of Chinese involved in speculating in crypto digital tokens such as bitcoin is high, and of course there are many Korean participants next door.
The concentration of coin speculators and the concentration of miners has allowed the cryptocurrency community to flourish again in the past few years. Bitcoin prices have risen wildly, posing a threat to the financial security of countries. As early as January 2018, the Office of the Leading Group for the Special Rectification of Internet Financial Risks issued a document requiring local governments to guide mining enterprises in their jurisdictions and exit in an orderly manner. Locally, Erdos “Notice on Guiding the Orderly Withdrawal of Virtual Currency “Mining” Enterprises in Our Region” requires “restricting “innovation” that deviates from the needs of the real economy and circumvents regulation. The virtual currency mining industry is a pseudo-financial innovation that has nothing to do with the real economy and should not be supported. Accordingly, multiple mistakes and take comprehensive measures such as electricity prices, land, taxation and environmental protection to guide the orderly withdrawal of relevant mining enterprises and encourage the transition to state-supported class of cloud computing.” On the 18th of this month, the three associations jointly issued the “Announcement on Preventing the Risk of Speculation in Virtual Currency Trading”, emphasizing that financial institutions, payment institutions and other member units shall not use virtual currency to price products and services, and shall not directly or indirectly conduct virtual currency-related business.
Meanwhile, in April 2019, the National Development and Reform Commission published the “Guidance Catalogue for Industrial Structure Adjustment (Draft for Comments)”, which classified virtual currency mining as a category that should be eliminated, but the official version released that year removed coin mining from the elimination list. on May 21, 2021, the Financial Stability Development Committee of the State Council held a meeting to clearly “crack down on bitcoin mining and The State Council’s Financial Stability Development Committee held a meeting on May 21, 2021, and explicitly “cracked down on bitcoin mining and trading.
What are the legal consequences of continuing to mine?
A few days ago, some alumni came to ask if there were any mining machines that could be dispatched, and Sister Za was really having trouble raising the resources that were in short supply at the time. But it is clear from this that the mining is hot and the enthusiasm of the people involved. There is demand, there is supply. It can be predicted that the people who bought the mining machine is not likely to easily discard, continue to go into the “underground” mining should be a lot of people.
The most important legal risk is: Article 225 of the Criminal Code illegal business crime.
Specifically, the following elements must be judged.
(1) Whether coin mining is a business activity
According to the “Anti-Unfair Competition Law”, operators are natural persons, legal persons and unincorporated organizations engaged in the production or operation of goods or the provision of services. Coin mining is the act of increasing the supply of virtual coins, i.e. the act of producing token, which is likely to be identified as an operation.
(2) Whether it is against the antecedent law
Just like the lesson of the online lending industry, there are actually predecessor laws in the cryptocurrency circle, only that they are ignored by the majority of practitioners intentionally or unintentionally. The People’s Bank Law and the Regulations on the Administration of RMB both emphasize that no unit or individual may print or offer tokens for circulation in the market in lieu of RMB. To this day, the interpretative range of token coupons includes digital tokens, etc.
(3) Falling under Article 225(4) of the Criminal Law
“If the mining activity objectively disrupts the market order, and if it reaches the level of aggravating circumstances in an individual case, it constitutes a crime with a maximum sentence of 15 years. If it does not reach the degree of seriousness, it may be punished by a fine of up to 200,000 yuan in accordance with administrative violations (after the amendment of the Banking Law, this amount will be adjusted to 20 million yuan).
Third, contracts, futures trading
Musk’s remarks have affected the price of the coin, and if in the legal secondary trading market, his remarks will be severely punished by law. However, it is because digital coins have no borders and countries have different regulatory attitudes, resulting in leeks being cut continuously.
From some pictures and messages circulated by people in the cryptocurrency circle, we found that the players who matched funds to engage in contracts and futures trading suffered heavy losses, and one even came close to a complete blowout. Sister Za is also a financial veteran, still full of respect for finance, but many players do not think they are playing financial derivatives, but also think it is a family, playing heartbeat, the kind of pain overnight back to the liberation of the former, I hope you do not easily try.
The net of law is wide open. The third item of Article 225 of the Criminal Law clearly: “without the approval of the relevant state departments to illegally operate securities, futures, insurance business, or illegally engaged in the business of payment and settlement of funds” constitutes the crime of illegal operation. From the cases handled by Sara herself, the local financial regulators are never stingy in issuing the letter of “illegal futures business”. Therefore, it is very likely that some enterprises in the cryptocurrency circle doing futures business will be considered as illegal futures and enter the scope of the third regulation.
Readers who have a legal basis may say, “the law of crime and punishment”, the contract does not constitute a crime if it is not stipulated in the legal provisions. In practice, this may be handled either by interpreting the contract as a kind of futures, or by using the fourth subparagraph to deal with it, but Sara thinks there is room for defense.
Written in the end
There are still readers who are struggling with the reason why the mining circle is gone. In fact, from the time Musk seized Bitcoin energy consumption, he realized that if one day BTC is collectively besieged by all countries, it is basically to protect the environment as the number.
In fact, from the root, bitcoin was born in 2008 with Hayekian ideas, and the existing country-based world pattern does not match, and national laws are also an extension of national management, so the contradiction between bitcoin and other tokens popular with the current law is obvious.
Therefore, continued crypto token mining will continue to be at odds with the law, not only in our country, but national caution regarding digital tokens will be reflected in all aspects, and national laws and enforcement will only tighten as virtual coins erode fiat money and financial security. Whether you want it or not, the law is there, not in vain.
Posted by:CoinYuppie，Reprinted with attribution to:https://coinyuppie.com/what-are-the-legal-consequences-of-continuing-bitcoin-mining-in-china/
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