First, the importance of international regulatory cooperation
With the popularization of blockchain technology, as a value transmission network in the era of Internet digital economy, it is further promoting the mutual flow between virtual currency and physical property rights, and will create a large number of emerging positions and entrepreneurial opportunities. The blockchain guarantees the convenience and tradability of the transfer of the right to use the financing project.
However, the blockchain, especially the virtual currency industry, is easy to be speculated and speculative. Its rapid global development, along with various risks, the huge investment or speculative value in it attracts many high-risk preference investors. At the same time, it also makes some lawless elements ready to move. Therefore, the blockchain industry, including virtual currency, needs to be regulated and regulated. Some financially developed countries are at the forefront of blockchain regulation and legislation. The experience and lessons in the supervision of blockchains in various countries provide inspiration for the standardized development of China's blockchain industry, and on the other hand provide a reference for China's strong international cooperation.
According to the definition of the Global Financial Stability Board, financial technology is the integration of finance and technology, creating new business models, new applications, new processes and new products, thus forming a very strong way to provide financial markets, financial institutions and financial services. Business models, technology applications, and processes and products that have a significant impact. Financial technology has a sustained and huge impact on the world. At the same time, financial technology has greater risks. In the field of financial technology segmentation, the current non-blockchain field is a huge impact and risk to the public, and may have a huge impact on the future society. However, blockchain technology is different from other financial technology industries, especially its decentralized features, which enable regulators to directly suspend all related businesses. This kind of governance can prevent related risks in the short term, and long-term effects are open to question. . Does this really ban ICO or virtual currency trading on the mainland, or is it just forcing it to go underground or abroad? Regulators absolutely forbid certain things, the problem is that there is no time to weigh the pros and cons.
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For example, the choice of where to register an ICO project is critical to jurisdiction. The reason why Ethereum chose to establish a foundation in Zug, Switzerland is undoubtedly to avoid unnecessary legal risks. Most ICO projects will choose to establish offshore companies in Singapore, Gibraltar, the Virgin Islands, the Cayman Islands or Seychelles, on the one hand for tax avoidance needs, and on the other hand to avoid the attention of the regulatory authorities. However, in some white papers of the ICO project, some actual controllers do not talk about the location of the legal subjects of the project. They even think that the project development team is composed of loose communities and does not need to establish a legal organization such as a company.
China's regulatory attitude towards ICO is relatively clear. After the regulatory prohibition of ICO, domestic ICO projects were interrupted and virtual currency was cleared to investors, but many projects turned overseas to continue project operations. At this time, the importance of joint supervision or collaboration among many countries is highlighted. The reasons are as follows:
(1) The cross-border circulation of virtual currency is extremely convenient. Without multi-country coordination, it cannot be effectively supervised, and may even impact China's foreign exchange control system.
(2) It is easy for the actual controller of the ICO or IEO project to choose another jurisdiction. For example, the tax-free zone such as the Virgin Islands is often the best choice for ICO projects, and the cost is low.
(3) The regulatory policies of ICO, STO and IEO in the world vary greatly. Some countries are legalizing the ICO and attracting preferential policies.
There are huge differences in domestic and international regulatory policies, which directly lead to China's complete ban on ICO and IEO's regulatory policies are easy to fall through, and it is difficult to achieve the expected results, but forced some blockchain projects to go to sea. Due to the certain personal connections and community foundations in China, the blockchain projects that go out to sea are still mainly domestic investors, which is likely to cause capital outflows.
Second, the approach of careful supervision
I believe that under the premise of encouraging the balance between financial technology innovation and risk control, government supervision should also follow up in a timely manner. Relevant regulatory measures include both flexible and rigid controls. Regarding the former, the comparators are stationed in the ICO project location; release relevant reports; provide risk warnings; list high-risk projects or sponsors, and so on.
As for the latter, for example, promoting the construction of self-discipline of industry associations; directly introducing regulatory rules; punishing the initiators of illegal projects; transferring the offenders to the judiciary, accepting the legal load; and coordinating relevant countries to jointly formulate global regulatory rules, etc. . International experience in this area, the "blockchain international supervision and compliance response" book has made a lot of explanations.
In summary, from the establishment of a long-term national financial security and risk prevention regulatory mechanism and international experience, China should promote the cautious supervision and international cooperation of the blockchain (especially ICO, and the IEO business model that began in the first half of 2019) as soon as possible. . If the current ICO project cannot be effectively supervised, it is inevitable that overseas ICO projects will contain a large number of frauds, including false issuance, exaggeration and misleading investors, and even extreme risk events, jointly infringing the rights of Chinese investors, and emerging. The healthy development of the blockchain industry has adversely affected.
In order to improve the effectiveness of supervision, we recommend that regulators move their regulatory focus to the initial token issuance, focusing on ex ante regulation, and require project sponsors to make sufficient information disclosure and risk warnings for the projects initiated. Before the official regulatory rules are promulgated, the regulators can encourage the Internet Finance Association to refer to the online lending industry and other fields to guide the development of ICO project information disclosure rules and reduce fraud. At the same time, strengthen cooperation with national regulators such as the United States, Japan, South Korea, Singapore and Thailand, exchange law enforcement information in a timely manner, and sign corresponding memoranda to jointly crack down on potential criminals.
Finally, the regulation of ICO can combine regulation of virtual currency trading platforms. For example, before the new trading platform on the trading platform, the online token standard should be drawn up, and the prospects of the token market to be launched online should be reviewed, and the quality tokens that have undergone stricter ratings and audits should be selected to avoid Substantial content of speculative speculation. At the same time, the legislature or the future judiciary should give the ICO a clearer legal definition, classify accordingly, and gradually build a complete regulatory framework to promote the healthy development of the entire blockchain entrepreneurship industry.
3. Rethinking current policies from international experience
Some researchers believe that the current banned supervision method in China can control the risk of virtual currency, but it inhibits financial innovation and does not conform to the trend of financial development. It is only an expedient measure at the current stage. In the long run, China should still accept and support the development of blockchain technology, regulate the trading of virtual currency, and build a sound regulatory framework. Specific regulatory approaches include strengthening business access management; strengthening business law enforcement inspections; strengthening hierarchical management of business; and strengthening guidance to business entities. Considering the multi-party considerations, we believe that there is still room for rethinking related regulatory policies.
First, at present, our policy is a one-size-fits-all approach to blockchain crowdfunding. Many related industries in the blockchain field often have no specific legal subjects (especially public chains), and a large number of participants are free to enter or exit at any time and at any address on a global scale. This is particularly typical of Bitcoin's distribution mechanism and community self-maintenance mechanisms in some blockchain areas. As a result, it is difficult to achieve the expected results and goals in the implementation of a paper ban.
The development of blockchain technology, including China, has been written into several national plans. The blockchain has some technological revolutionary features, which may represent new trends and directions for the development of future network technologies, and may even lead to a new era of technology, which has basically reached the consensus of a large number of technical experts around the world. Well, we may go back and look at some of China’s regulatory policies, which may not be appropriate. The state should focus on controlling the financial risks while paying attention to the great social significance brought about by technological innovation, and then fine-tuning the current regulatory policies.
Second, in the past two decades, there have been typical sports law enforcement in China, which has often been criticized by scholars. Some of the existing regulatory policies in the field of financial technology also have the characteristics of sports law enforcement. As scholars have said, people are accustomed to using "sports" thinking in the "rule of law" activities, and in administrative law enforcement activities, they usually appear in the form of centralized inspection, special rectification, and special law enforcement. Although sports law enforcement has achieved great results in the short term, in the long run, it has not achieved the effect of controlling and preventing illegal activities. The temporary and emergency characteristics of sports law enforcement violate the law of market operation, which makes many management departments sway and rectify the market. This kind of sports law enforcement is not uncommon in the field of financial technology regulation.
The report of the 19th National Congress reaffirmed that the full rule of law is a profound revolution in state governance. There is a contradiction between the sports law enforcement model and the stability of the rule of law and the expectations of practitioners for the stability of the socialist market economy. Although the nature of the science and technology financial supervision policy is not exactly the same as the stability requirements of the legal system, whether it is administrative law enforcement or the introduction of corresponding policies, it should still cooperate with the stability and predictability of the rule of law. Therefore, the above-mentioned blockchain-related ban-type policies and subsequent clean-up and rectification have room for rethinking.
Third, under the current domestic strong regulatory policies, blockchain-related businesses have moved overseas. In the survey, we found that a large number of important customer groups in the overseas blockchain-related business are still Chinese citizens. Chinese citizens may still be caught in the relevant investment risks or even fraud.
Blockchain financial related risks can be transmitted to Chinese citizens in a peer-to-peer manner, breaking the barriers of national boundaries and posing a huge challenge to the effectiveness of current regulatory policies. How Chinese regulators violate the rights of their citizens Conduct effective enforcement? Given the extremely limited administrative resources of current regulators, unless faced with extreme financial or investment risks, regulators are likely to have no time to take care of them.
Fourth, rethinking the formulation of regulatory policies from a global perspective, we will find that the technical characteristics of the blockchain inherently determine its typical transnationality, whether it is blockchain ICO financing, virtual currency trading or a large number of blockchain entrepreneurial projects. In fact, this is not the case. In particular, countries such as Singapore and Gibraltar adopt the “tightening and loosening” strategy, embracing the blockchain technology and related virtual currency transactions, ICO, etc., and adopting some obligation exemption measures for related companies to make financial Risk spillover. Therefore, it is very difficult for a sovereign state to effectively supervise it. Instead of issuing a simple prohibition order, it is better to open up the regulator and incorporate it into a more effective regulatory channel.
Fourth, the regulatory policy determines the pros and cons of the industry
In view of the risks in the blockchain field, the supervision of the central bank and local financial regulatory agencies should balance financial innovation and risk prevention. When discussing the virtual currency, officials of the International Monetary Fund (IMF) proposed that in order to avoid over-regulation and stifle innovation, any policy response to virtual currency needs to strike a proper balance between strong disposal of risk and abuse.
From the global regulatory policies and practices, there is strong inter-country regulatory competition in the blockchain industry. After China issued a document requesting the closure of the virtual currency trading platform, Japan issued the exchange license at almost the same time without losing the opportunity. When China adopted a fully tightened policy in the bitcoin and blockchain industry (ICO financing), the US Commodity Futures Trading Commission announced that it approved the official launch of Bitcoin futures. In 2018, when China plans to take further stringent measures, the first stable currency approved by the New York State Financial Services Authority will be launched (the Gemini Dollar issued by Gemini and the stable currency Paxos Standard issued by Paxos, respectively. The token corresponds to 1 US dollar). From a global perspective, more and more countries are responding to risk management in this area with compliance rather than absolute prohibition.
The policies of the financially developed countries are contrary to China's policies at a similar time point. It is not so coincidental that it is better to say that they have their own thoughts. Since the beginning of 2018, more and more countries such as France, Canada, Singapore, Germany and Switzerland have adopted a cautious open policy on blockchain, while strengthening institutions to implement user identification, anti-money laundering, counter-terrorism financing and combating finance. Fraud and other criminal acts.
Among them, some countries have a constructive and reference value for their regulatory programs, such as the guidelines of the Swiss regulatory authorities. The definition of asset tokens is broad and emphasizes that asset tokens are regulated as securities. Another example is the Thai regulatory policy that requires the virtual currency trading platform to execute third party managed customer assets.
In short, some policies of the Chinese government have clearly recognized and recognized the huge role of blockchain technology. Since 2017, China has issued “Guiding Opinions on Actively Promoting Supply Chain Innovation and Application” and “National Technology Transfer System Construction Plan”. These policies affirm the positive value of blockchain technology in promoting the financial industry.
The trend of decentralized virtual currency against traditional French currency is obviously difficult to avoid. The rise of stable currency in recent years may accelerate this trend. From the perspective of the regulatory authorities, this can also be seen as another great opportunity for the Chinese economy. Chinese companies have an advantage in the blockchain field. If regulators are more actively involved in the path of regulation and regulation, reshaping exchanges through regulatory rules and controlling relevant data will take the initiative in regulating the regulatory process. In this way, the regulators actively intervene in technology, participate in rulemaking, and master the right of international discourse, so as to avoid domestic enterprises encountering barriers when they open up the international market and become passive due to the loss of the market.
From a global perspective, many countries have actively promoted the development of financial technology industries, including blockchains, and strived to climb the industry peak. Whether an industry can prosper is closely related to the strengths and weaknesses of relevant regulatory policies and regulations. Effective and excellent regulatory policies will inevitably help the industry to develop more rapidly while reducing financial risks. The competition among national regulatory policies is fundamental and overall for the development of a country's industry, and largely determines the future development of financial technology. The development of financial technology is changing with each passing day. It is obviously worthwhile to conduct in-depth research, dynamic evaluation and rethinking of existing regulatory policies!
(For more details, see Deng Jianpeng, Sun Penglei: “Intermediary Chain Supervision and Compliance Response”, Mechanical Industry Press, 2019)