Summary of Important Domestic Cryptocurrency Regulatory Documents

This article is organized by Chain Catcher.

1. Announcement by the China Internet Finance Association, China Banking Association, and China Payment and Clearing Association on Preventing Risks of Virtual Currency Trading Speculation (May 18, 2021)
   Recently, the prices of virtual currencies have surged and plummeted, and the speculation activities related to virtual currency trading have rebounded, seriously harming the property safety of the public and disrupting the normal order of the economy and finance. In order to further implement the requirements issued by the People's Bank of China and other departments regarding the "Notice on Preventing Bitcoin Risks" and the "Announcement on Preventing Risks of Token Issuance and Financing," and to prevent risks of virtual currency trading speculation, the China Internet Finance Association, China Banking Association, and China Payment and Clearing Association jointly announce the following matters:
   1. Correctly understand the essential attributes of virtual currency and related business activities
   Virtual currency is a specific type of virtual commodity, not issued by monetary authorities, lacking monetary attributes such as legal tender and compulsion, and is not real currency; it should not and cannot circulate as currency in the market.
   Engaging in exchange services between legal currency and virtual currency, trading virtual currency as a central counterparty, providing information intermediary and pricing services for virtual currency trading, token issuance financing, and trading of virtual currency derivatives, among other related trading activities, violates relevant laws and regulations and is suspected of illegal fundraising, illegal issuance of securities, illegal sale of token vouchers, and other criminal activities.
   2. Relevant institutions must not engage in businesses related to virtual currency
   Financial institutions, payment institutions, and other member units must effectively enhance their social responsibility, must not use virtual currency to price products and services, must not underwrite insurance related to virtual currency or include virtual currency in the scope of insurance liability, and must not directly or indirectly provide other services related to virtual currency for customers, including but not limited to: providing customers with virtual currency registration, trading, clearing, settlement services; accepting virtual currency or using virtual currency as a payment settlement tool; providing exchange services between virtual currency and RMB or foreign currencies; conducting storage, custody, and mortgage services for virtual currency; issuing financial products related to virtual currency; using virtual currency as investment targets for trusts, funds, etc.
   Financial institutions, payment institutions, and other member units should effectively strengthen the monitoring of trading funds for virtual currencies, relying on industry self-regulatory mechanisms, enhancing risk information sharing, and improving the level of industry risk prevention and control; if illegal clues are discovered, they should promptly take measures to restrict, suspend, or terminate related transactions and services according to procedures, and report to relevant departments; at the same time, actively use multiple channels and diversified outreach methods to strengthen customer publicity and warning education, and proactively provide risk warnings related to virtual currencies.
   Internet platform enterprises must not provide online operating venues, commercial displays, marketing promotions, paid traffic diversion, and other services for virtual currency-related business activities. If relevant problems are discovered, they should promptly report to relevant departments and provide technical support and assistance for related investigations and inquiries.
   3. Consumers should enhance their risk prevention awareness to guard against property and rights losses
   Virtual currency has no real value support, and its price is easily manipulated. Related speculative trading activities carry multiple risks, including false asset risks, operational failure risks, and investment speculation risks. From the current judicial practice in our country, contracts for virtual currency trading are not protected by law, and the consequences and losses arising from investment trading are borne by the relevant parties.
   Consumers should enhance their risk awareness, establish correct investment concepts, refrain from participating in virtual currency trading speculation activities, and guard against personal property and rights losses. They should cherish their personal bank accounts and not use them for activities such as recharging and withdrawing from virtual currency accounts, purchasing and selling related trading recharge codes, and transferring related trading funds, to prevent illegal use and personal information leakage.
   4. Strengthen self-discipline management of member units
   All member units must strictly implement national regulatory requirements, adhere to industry self-discipline commitments, and resolutely not engage in or participate in any business activities related to virtual currency. The three associations will strengthen self-discipline supervision of member units, and if violations of relevant regulatory provisions and industry self-discipline management requirements are found, they will take disciplinary measures such as industry notifications, suspension of membership rights, and cancellation of membership qualifications according to relevant self-discipline norms, and report to financial management departments. If suspected of illegal crimes, relevant clues will be transferred to public security organs.
   China Internet Finance Association
   China Banking Association
   China Payment and Clearing Association
   May 18, 2021
2. Draft for Comments on the Law of the People's Republic of China on the People's Bank of China (Revised Draft) (October 23, 2020)
   Article 22: No unit or individual may produce or sell token vouchers and digital tokens to replace RMB for circulation in the market.

Article 65: Those who produce and sell token vouchers and digital tokens to replace RMB for circulation in the market shall be ordered by the People's Bank of China to stop the illegal activities, destroy the illegally produced and sold token vouchers and digital tokens, confiscate illegal gains, and impose a fine of up to five times the illegal amount; if the illegal amount cannot be determined, a fine of not less than 100,000 yuan and not more than 500,000 yuan shall be imposed. In serious cases, penalties shall be imposed in accordance with the provisions of the second paragraph of Article 61.

3. Announcement by the People's Bank of China, the Central Cyberspace Affairs Commission, the Ministry of Industry and Information Technology, the State Administration for Industry and Commerce, the China Banking Regulatory Commission, the China Securities Regulatory Commission, and the China Insurance Regulatory Commission on Preventing Risks of Token Issuance and Financing (September 4, 2017)
   Recently, a large number of activities have emerged in the country that raise funds through the issuance of tokens, including initial coin offerings (ICOs), and speculation is rampant, suspected of engaging in illegal financial activities, seriously disrupting the economic and financial order. To implement the spirit of the National Financial Work Conference, protect the legitimate rights and interests of investors, and prevent and resolve financial risks, in accordance with the "Law of the People's Republic of China on the People's Bank of China," "Law of the People's Republic of China on Commercial Banks," "Law of the People's Republic of China on Securities," "Cybersecurity Law of the People's Republic of China," "Telecommunications Regulations of the People's Republic of China," and "Measures for the Prohibition of Illegal Financial Institutions and Illegal Financial Activities," the following matters are announced:
   1. Accurately understand the essential attributes of token issuance and financing activities
   Token issuance and financing refer to the act of the financing entity raising Bitcoin, Ethereum, and other so-called "virtual currencies" through the illegal sale and circulation of tokens, which is essentially an unauthorized public financing behavior suspected of illegal sale of token vouchers, illegal issuance of securities, as well as illegal fundraising, financial fraud, pyramid schemes, and other illegal criminal activities. Relevant departments will closely monitor related dynamics, strengthen collaboration with judicial departments and local governments, strictly enforce the law, and resolutely govern market chaos. If criminal issues are discovered, they will be transferred to judicial authorities.
   The tokens or "virtual currencies" used in token issuance and financing are not issued by monetary authorities, lack monetary attributes such as legal tender and compulsion, do not have the same legal status as currency, and cannot and should not be circulated as currency in the market.
   2. No organization or individual may illegally engage in token issuance and financing activities
   From the date of this announcement, all types of token issuance and financing activities must be immediately stopped. Organizations and individuals that have completed token issuance and financing should make arrangements for refunds and reasonably protect investors' rights and interests, properly handle risks. Relevant departments will seriously investigate and deal with token issuance and financing activities that refuse to stop and illegal activities in completed token issuance and financing projects according to law.
   3. Strengthen the management of token financing trading platforms
   From the date of this announcement, any so-called token financing trading platform must not engage in exchange services between legal currency and tokens or "virtual currencies," must not buy or sell tokens or "virtual currencies" as a central counterparty, and must not provide pricing, information intermediary, and other services for tokens or "virtual currencies."
   For token financing trading platforms with illegal issues, financial management departments will request telecommunications authorities to close their websites and mobile apps according to law, request cyberspace authorities to remove their mobile apps from app stores, and request business management departments to revoke their business licenses according to law.
   4. Financial institutions and non-bank payment institutions must not engage in businesses related to token issuance and financing trading
   Financial institutions and non-bank payment institutions must not directly or indirectly provide account opening, registration, trading, clearing, settlement, and other products or services for token issuance and financing and "virtual currencies," must not underwrite insurance related to tokens and "virtual currencies," or include tokens and "virtual currencies" in the scope of insurance liability. Financial institutions and non-bank payment institutions that discover illegal clues related to token issuance and financing trading should promptly report to relevant departments.
   5. The public should be highly vigilant against the risks of token issuance and financing and trading
   Token issuance and financing and trading carry multiple risks, including false asset risks, operational failure risks, and investment speculation risks, and investors must bear the investment risks themselves. It is hoped that investors will be cautious to avoid being deceived.
   For various illegal financial activities using the name "coin," the public should strengthen their risk prevention awareness and identification ability and promptly report relevant illegal clues.
   6. Fully leverage the self-discipline role of industry organizations
   Various financial industry organizations should interpret policies well, urge member units to consciously resist illegal financial activities related to token issuance and financing trading and "virtual currencies," stay away from market chaos, strengthen investor education, and jointly maintain normal financial order.
4. Notice on Preventing Bitcoin Risks (December 3, 2013)
   (People's Bank of China, Ministry of Industry and Information Technology, China Banking Regulatory Commission, China Securities Regulatory Commission, China Insurance Regulatory Commission, Yinfai [2013] No. 289)
   Recently, a so-called "Bitcoin" calculated by specific computer programs has attracted widespread attention internationally, and some institutions and individuals in the country have taken the opportunity to speculate on Bitcoin and related products. To protect the property rights and interests of the public, safeguard the legal currency status of RMB, prevent money laundering risks, and maintain financial stability, in accordance with the "Law of the People's Republic of China on the People's Bank of China," "Anti-Money Laundering Law of the People's Republic of China," "Law of the People's Republic of China on Commercial Banks," "Telecommunications Regulations of the People's Republic of China," and other relevant laws and regulations, the following matters are notified:
   1. Correctly understand the attributes of Bitcoin
   Bitcoin has four main characteristics: no centralized issuer, limited total supply, unrestricted use across regions, and anonymity. Although Bitcoin is referred to as "currency," it is not issued by monetary authorities, lacks monetary attributes such as legal tender and compulsion, and is not true currency. In nature, Bitcoin should be regarded as a specific type of virtual commodity, lacking the same legal status as currency, and cannot and should not circulate as currency in the market.
   2. Financial institutions and payment institutions must not engage in businesses related to Bitcoin
   At this stage, financial institutions and payment institutions must not price products or services in Bitcoin, must not buy or sell Bitcoin or act as a central counterparty for Bitcoin transactions, must not underwrite insurance related to Bitcoin or include Bitcoin in the scope of insurance liability, and must not directly or indirectly provide other services related to Bitcoin for customers, including: providing customers with Bitcoin registration, trading, clearing, settlement services; accepting Bitcoin or using Bitcoin as a payment settlement tool; providing exchange services between Bitcoin and RMB or foreign currencies; conducting storage, custody, and mortgage services for Bitcoin; issuing financial products related to Bitcoin; using Bitcoin as investment targets for trusts, funds, etc.
   3. Strengthen the management of Bitcoin-related websites
   According to the "Telecommunications Regulations of the People's Republic of China" and the "Measures for the Administration of Internet Information Services," websites providing Bitcoin registration, trading, and other services must be filed with telecommunications management authorities.
   Telecommunications management authorities shall close illegal Bitcoin-related websites according to the identification and penalty opinions of relevant management departments.
   4. Prevent potential money laundering risks associated with Bitcoin
   Branches of the People's Bank of China should closely monitor the trends and situations of Bitcoin and other similar virtual commodities with characteristics such as anonymity and cross-border circulation convenience, carefully assess money laundering risks, and study and formulate targeted prevention measures. Each branch should include institutions that legally establish and provide Bitcoin registration, trading, and other services in their jurisdiction under anti-money laundering supervision and urge them to strengthen anti-money laundering monitoring.
   Websites providing Bitcoin registration, trading, and other services should fulfill their anti-money laundering obligations, identify user identities, and require users to register with real names, recording names, ID card numbers, and other information. Financial institutions, payment institutions, and websites providing Bitcoin registration, trading, and other services should immediately report any suspicious transactions related to Bitcoin and other virtual commodities to the China Anti-Money Laundering Monitoring and Analysis Center and cooperate with the People's Bank of China's anti-money laundering investigations; if they discover clues related to fraud, gambling, money laundering, and other criminal activities using Bitcoin, they should promptly report to public security organs.
   5. Strengthen education on currency knowledge and investment risk warnings for the public
   All departments, financial institutions, and payment institutions should correctly use currency concepts in their daily work, focus on strengthening education on currency knowledge for the public, and incorporate concepts such as correctly understanding currency, properly viewing virtual commodities and virtual currencies, rational investment, reasonably controlling investment risks, and safeguarding personal property safety into financial knowledge popularization activities, guiding the public to establish correct concepts of currency and investment.