SO for a while now, China has been leading the waves when it comes to bitcoins price.. The Chinese coin markets are holding the most volume and the price has been following that volume. And as we have expected for some time, the Chinese govt has been watching this. So today, they decided to release some rules and statements regarding bitcoin, which was followed quickly by a small crash in the overall bitcoin price. Heres a link about the news:
China Restricts Banks' Use of Bitcoins
but what is really happening? Honestly to me it seems as though this is the same thing that happened in the USA months ago: regulatory oversight.
Well, I present to you the actual statement from the Chinese governtment which I roughly translated using google, so let me know what YOU think!
Here it is:
"Q: how to define the nature of our current Bitcoin?
A: Bitcoin has no central issuer, limited amount, using four main features without geographical restrictions and anonymity. Although some people called Bitcoin "currency", but because it is not issued by the monetary authorities, such as not having sex with mandatory legal tender currency property, not the true meaning of money. From the nature point of view, Bitcoin is a specific virtual goods, does not have legal status and monetary equivalent, can not and should not be used as currency in circulation in the market.
Q: Bitcoin will focus on the risk of what? Are our existing financial system will have an impact?
A: At present, the public for lack of adequate understanding of bitcoin, for some individuals to follow suit or speculative psychological hold, use and trade bitcoins. This property belongs to a particular look from Bitcoin virtual goods, there may be the following risks:
First, the higher the risk of speculation. Bitcoin market smaller capacity, 24 hours of continuous open transaction, there is no price limit, the price likely to be opportunists control, resulting in volatility, the risk is great. Ordinary investors blindly follow easily suffer heavy losses. Meanwhile, the relevant market is still in bitcoin spontaneous state, there may be counterparty risk, financial risk and safety aspects of clearing and settlement risks, investors are difficult to effectively safeguard the legitimate rights and interests.
The second is a higher risk of money laundering. Since Bitcoin transactions with anonymity and without geographical restrictions characteristics, its difficult to monitor capital flows, facilitated money laundering and terrorist financing activities.
Third, the risk of being exploited criminals or organization. At present, the international community has emerged drugs, firearms use Bitcoin transactions carried out other criminal activities related cases have been investigated. Meanwhile, the position of each bit uneven currency trading site, some sites have not been legally registered, was arrested for operating; some websites security and anti-risk ability, prone to hacker attacks or escaped fled website operators and other events.
From the current situation, due to the small amount of bitcoins, limited trading market, financial institutions are not directly involved in Bitcoin trading and investment activities, therefore, the risks associated with bitcoin is still not up to the impact of China's financial system degree.
Q: People's Bank and other five ministries issued "on guard against the risk of Bitcoin notice" includes what the main content?
A: The People's Bank has been highly concerned about Bitcoin trends, and keep track of the policies and measures relevant regulatory agencies around the world. December 3, in conjunction with the Ministry of the People's Bank, the CBRC, CSRC and CIRC issued the "People's Bank of China Ministry of Industry and Information Technology of China Banking Regulatory Commission, China Securities Regulatory Commission, China Insurance Regulatory Commission on the Prevention of risk bitcoin Notice "(Yin Fa [2013] No. 289, hereinafter referred to as" the "Notice" "), unless expressly bitcoin network virtual product attributes, the" notice "mainly clear the following:
First, the explicit requirements of each stage, financial institutions and payment institutions may not conduct business associated with bitcoins are not allowed to bitcoin for a product or service pricing, may not be sold or traded bitcoins as a central counterparty shall not be covered by the insurance associated with bitcoins Bitcoin into business or insurance coverage and so on.
Second, a clear request Bitcoin registration, transaction services such as Internet sites should be filed in the telecommunications regulatory agencies, and earnestly fulfill anti-money laundering obligations, the user identity identification, reporting of suspicious transactions.
Third, the clear requirements of the relevant departments and financial institutions, payment institutions proper use of money concepts in their daily work, focused on strengthening the education of the public currency of knowledge, the correct understanding of the currency, a correct view of virtual goods and currencies, rational investment, reasonable control investment risk and safeguard their property and other concepts included in the content of financial literacy activities, and guide the public to establish a correct concept of money and investment philosophy.
Q: What is the People's Bank of recent regulatory measures will be taken against Bitcoin transactions?
A: Bitcoin transaction as a commodity trading behavior on the Internet, ordinary people at risk from the premise, with the freedom to participate. Next, the People's Bank will work with the relevant ministries, supervision of financial institutions, payment institutions and provide Internet stations Bitcoin registration, trading and other services to effectively implement the "notice" requirement. Meanwhile, the People's Bank will be based on their responsibilities and continue to pay close attention to the movements of Bitcoin and the risks associated with public money to further strengthen the knowledge, to guide the public to establish a correct concept of money and investment philosophy. (End)"
I find this all to be quite interesting, and I await further developments, but at the time it seems the price has mostly recovered from the small crash and panic this caused, and most of the panic was caused by incorrect wording in US articles, stating that this "banned" BTC in china, which is not true. It did, however, make it so bitcoin "not having sex with mandatory legal tender currency property" haha... so no Chinese currency/BTC babies?? Tell me what you think bitcitizens.
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