Interpretation of the new regulations of the National Development and Reform Commission: Is virtual currency mining allowed or restricted to the restricted or eliminated category?

According to the author: The latest revision of the "Industrial Structure Adjustment Catalogue" issued by the National Development and Reform Commission did not classify virtual currency mining as a phase-out category. Is it classified as a permitted category, or may it be restricted or eliminated?

"Virtual currency 'mining' activity (production process of virtual currency such as Bitcoin)" was published in the National Development and Reform Commission ("NDRC") on April 8, 2019, "Industrial Structure Adjustment Guidance Catalogue (2019, "Consultation Draft" (""Draft for Comment") is listed as a phase-out category, but the item was deliberated and approved at the 2nd meeting of the meeting on August 27, 2019, and officially announced on October 30, 2019. The Industrial Structure Adjustment Catalogue (2019) is not seen in the Catalogue.

When the "Draft for Comment" was just released, the author briefly commented on the impact of the New Deal on mining enterprises in "Where is the virtual currency mining industry going ? After the publication of the Catalogue, some mine friends came to consult the official version of the document, saying that many of the current arguments that the "catalog" did not include virtual currency mining in the elimination category, the state is no longer holding virtual currency mining. Opposing attitude, even think that the spring of virtual currency mining companies has arrived.

According to the author's understanding of the relevant provisions of the Catalogue and the actual situation, the Catalogue does not explicitly list virtual currency mining in the elimination category. For the mining circle, the overall situation should be considered a good thing, at least not in black and white. To be banned, there will be room and room for survival.

However, I don't know if you noticed it. The Catalogue continues one of the settings in the Exposure Draft – all in the elimination category and the restriction category; and one of the main locations of virtual currency mining companies – – The regulatory authorities in Inner Mongolia continue to carry out clean-up and rectification actions against virtual currency mining companies after the publication of the Catalogue. So, is virtual currency mining allowed to be allowed, or is it being restricted or eliminated?

1. The bottom item in the Catalog

According to the "Decision of the State Council on Issuing and Implementing the Interim Provisions on Promoting Industrial Structure Adjustment", the "Catalogue" consists of three categories: encouraged, restricted and eliminated; not in the above three categories, and in conformity with relevant national laws, regulations and policies. The stipulated is the allowable class, which allows the class not to be included in the Catalog.

The author has noticed that there are one basic clauses in the restricted category and the eliminated category under the Catalogue: it does not comply with the Air Pollution Prevention and Control Law, the Water Pollution Prevention and Control Law, the Solid Waste Pollution Prevention and Control Law, and the Energy Conservation. Laws such as "Safe Production Law", "Product Quality Law", "Land Management Law", "Occupational Disease Prevention and Control Law" and other national laws and regulations do not meet the national mandatory standards for safety, environmental protection, energy consumption and quality, and do not meet the requirements of international environmental conventions. Process, technology, products, equipment.

The head of the Industry Development Department of the National Development and Reform Commission mentioned in a recent reporter's question the reason why the state set the terms in the Catalogue: the existing items cannot be completely covered, and they do not comply with laws, regulations and industry standards. The bottom item is set in the elimination class. [1]

From the point of view of the terms of the pocket, the author understands that if a process, technology, product or equipment does not meet any one or more of the following requirements, there is the possibility of being classified as a restricted or eliminated class:

(1) Not in compliance with the Law on Prevention and Control of Air Pollution, Law on Prevention and Control of Water Pollution, Law on Prevention and Control of Environmental Pollution by Solid Waste, Energy Conservation Law, Safety Production Law, Product Quality Law, Land Administration Law, and Occupational Disease Prevention and Control Law And other national laws and regulations;

(2) does not meet the national mandatory standards for safety, environmental protection, energy consumption and quality; or

(3) Does not comply with international environmental conventions and other requirements.

Specific to virtual currency mining, the "Catalogue" is not shown below any entry, does it mean that it is classified as a permitted class, or may it fall into a restricted or eliminated category? In view of the contents of the above-mentioned pockets, from the current status of land use, electricity consumption, energy consumption, environmental protection and safety of most mining enterprises, it is difficult to say that it is classified as permitted.

2. Relevant regulatory policies and actions in Inner Mongolia

Inner Mongolia Autonomous Region has always been one of the concentrated areas of virtual currency mining enterprises because of its abundant power resources. According to the public information, up to now, at least two notices have been issued in Inner Mongolia for the rectification of local virtual currency mining enterprises: one is the Ministry of Industry and Information Technology of Inner Mongolia Autonomous Region, the Development and Reform Commission of Inner Mongolia Autonomous Region, and the Public Security Department of Inner Mongolia Autonomous Region on August 30, 2019. The Notice of the Ministry of Local Finance Supervision of Inner Mongolia Autonomous Region and the Big Data Development Administration of Inner Mongolia Autonomous Region issued the "Notice on Inspection and Clearing of Virtual Currency "Drilling" Enterprises (Nonggong Xinxin Soft Word (2019) No. 384) ("No. 384"), and the other is the "Notice on Joint Inspection of the Clearing and Rectifying of Virtual Money" Mining Enterprises issued by the Inner Mongolia Autonomous Region Industrial and Information Technology Department on November 11, 2019 ("Joint Inspection Notice" ).

(1) Requirements under 384

According to the contents of the No. 384 text ( not publicly released ) that the author has seen, the five departments including the Inner Mongolia Development and Reform Commission have made demands on the affiliated labor bureaus, the National Development and Reform Commission, the Public Security Bureau, the Financial Office, and the Big Data Bureau. It is pointed out that the virtual currency mining industry belongs to the pseudo-financial innovation that has nothing to do with the real economy. It should not be supported. It is decided to carry out the work of clearing and rectifying the orderly withdrawal of virtual currency mining enterprises in Inner Mongolia; and, under the relevant requirements, the "sound system" In the article “Source Governance”, it is required to include virtual currency mining enterprises in the restricted industry catalogue.

It is worth pondering that the “Draft for Comment” published by the National Development and Reform Commission on April 8, 2019 included virtual currency mining in the phase-out category; the “Catalogue” phase-out category that was reviewed by the NDRC’s executive meeting on August 27 was deleted. On the August 30th, three days after the event, the 384th document jointly issued by the relevant departments including the Inner Mongolia Development and Reform Commission requested that the virtual currency mining enterprises be included in the restricted industry catalogue.

Although the Catalogue actually reviewed and approved at the time did not explicitly mention virtual currency mining, the local NDRC and other departments in Inner Mongolia did not have the authority to adjust the contents of the Catalogue and mine virtual currency into the restricted category, but Inner Mongolia The regulatory policy introduced at that time may explain that the NDRC’s national-to-local regulatory system, as well as other relevant departments in Inner Mongolia that jointly issued the policy, have generally refused to support virtual currency mining. Regulatory attitude.

(2) Requirements under the joint inspection notice

According to the joint inspection notice issued by the Inner Mongolia Autonomous Region Industrial and Information Technology Department on November 11, 2019, Inner Mongolia will follow the deployment of Circular No. 384, and the joint inspection team of the autonomous region will go to some of the leagues to clean up and rectify the virtual currency “mining” enterprises. Carry out joint inspections, focusing on the virtual economy that has nothing to do with the real economy, evading supervision and energy consumption, and using the “big data industry” as a virtual currency “mining” enterprise that enjoys preferential policies on local electricity prices, land and taxes. Conduct this inspection. The autonomous region shall formulate a unified technical standard for the inspection of “mining” enterprises, and the inspection team shall conduct inspections in accordance with uniform standards during inspections throughout the district. For individual companies that do not interfere with the unreasonable obstruction and do not cooperate with the inspection team to conduct inspections according to the "mining" enterprise, the company shall be held liable for the adverse effects caused by the company.

The author noticed that the issuance time of the joint inspection notice was more than ten days after the publication of the Catalogue, and the joint inspection notice explicitly mentioned that the relevant department's joint inspection of the virtual currency mining enterprise was based on the previously published No. 384 document. It can be seen that even though the Catalogue does not explicitly include virtual currency mining in the phase-out or restriction category, the newly issued policy of the Ministry of Industry and Information Technology of Inner Mongolia Autonomous Region (joint inspection notice) is still in line with the previous local policy (No. 384). In the same vein, the regulatory actions that have been carried out continue to advance, and the relevant government departments in Inner Mongolia still hold an unsupportive attitude toward virtual currency mining.

Virtual currency mining has not been included in the elimination category by the NDRC's "Catalog", and it has not been classified as a restricted or encouraged category. Does this mean that it is of course a permitted class or is it a restricted or eliminated category? At present, it is difficult to generalize.

Judging from the latest policies and actions released by the relevant departments of Inner Mongolia after the publication of the Catalogue, the author understands that the removal of virtual currency mining from the elimination category of the Catalogue does not mean that the mining enterprises can embark on the road from Kangzhuang. For many mining companies, it doesn't even mean the opening of the door.

The bottom item of the Catalogue is like a pocket. Can it be put into this pocket, there are statutory standards, and there is room for explanation. The statutory standard is whether the company's pollution prevention, energy conservation, safe production, product quality, land management, occupational disease prevention and other aspects are in compliance, and whether the process, technology, products or equipment are in compliance with national safety, environmental protection, energy consumption and quality. The standards are in line with the requirements of international environmental conventions; and the space for interpretation lies in the specific mastery and enforcement of the above-mentioned statutory standards by local government agencies.

In the context of the country's encouragement of blockchain technology development, in the scene where blockchain and virtual currency are often intertwined, the current Catalogue does not mention virtual currency mining, which reflects the flexibility of supervision and attack. Sex. The pockets at the bottom of the pocket are already there. If you don’t tie it, how to tie it, how tight it is, the regulatory layer will take it.

(This article was first published in Babbitt Information. If you need to reprint, please indicate the source.)

Author: Zhang Ling, a partner at law firm Han

Disclaimer: This article only represents the author's personal opinion and does not represent the opinions of the organization. The contents of this article do not constitute legal advice and investment advice. To reprint or cite any of the content in this article, please include the author's name.

[1] The head of the Industry Development Department of the National Development and Reform Commission answered the reporter's question on the Catalogue of Industrial Structure Adjustment (2019): http://www.gov.cn/zhengce/2019-11/06/content_5449198.htm