China's Central Bank Rocks Bitcoin; Says 'Not a Currency'
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No one thought too much when former Federal Reserve Chairman Alan Greenspan called Bitcoin a "bubble" in a TV interview with Bloomberg TV yesterday - the old man has made his share of bad calls - but once the central bank of China echoed Greenspan's thoughts that Bitcoin is a currency with no real meaning and no backers the virtual currency went into a tailspin.
Bitcoin is down about 14% overnight to $1070 after plunging below $1000 to as low as $870 in swift trading.
The People's Bank of China said Bitcoin is not a currency and banned financial institutions from performing transactions in it. The central bank did, however, say individuals could still transact in Bitcoin.
China sees a high risk of speculation in Bitcoin, a higher risk of money laundering, and a risk of being exploited by criminals or organized crime.
Below is the People's Bank of China responses to reporters related to Bitcoin (translated):
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)
Bitcoin is down about 14% overnight to $1070 after plunging below $1000 to as low as $870 in swift trading.
The People's Bank of China said Bitcoin is not a currency and banned financial institutions from performing transactions in it. The central bank did, however, say individuals could still transact in Bitcoin.
China sees a high risk of speculation in Bitcoin, a higher risk of money laundering, and a risk of being exploited by criminals or organized crime.
Below is the People's Bank of China responses to reporters related to Bitcoin (translated):
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)
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