Where does the wind come from? Blockchain Global Regulatory Insights | 2019 Global Blockchain (Hangzhou) Summit Forum

On May 17, the 2019 Global Blockchain (Hangzhou) Summit Forum, hosted by the Hangzhou Financial Office and hosted by Babbitt, was held in Hangzhou.

In the roundtable forum on the theme of “Where is the wind coming from – blockchain global regulatory insights”, Liu Xiaolei, director of the finance department of Peking University Guanghua School of Management, Li Guoquan, professor of Singapore’s Xinyue Social Science University, and co-chairman of the Hong Kong Blockchain Association Qing and Hashkey Capital CEO Deng Chao introduced the blockchain regulatory trends and compliance paths in China, Hong Kong, Singapore, and the United States, and discussed issues such as exchange licensing, regulatory technology, and practicality. . The host of the round table was hosted by Meng Yan, the promoter of the general economics and vice president of CSDN.


I. About the feasible path of each country

Moderator: We usually talk about the topic of supervision. What is expressed is something that cannot be done. In fact, for the entrepreneurs in the industry, what they want to know is exactly what can be done? Today, our round table is from Singapore, and there are those from Hong Kong. First of all, please talk about the feasible path of providing compliance to China in Southeast Asia and other countries you are familiar with, such as the United States. Blockchain entrepreneurs? Please give them a clear road.

 Mainland China

Liu Xiaolei: The bottom line I understand is that the bottom line is very clear, that is, it is impossible to raise funds from the public. Although many projects have been packaged into various forms, in the final analysis, they are raising funds to the common people. I think this is the bottom line. What can be done is also very clear. The use of alliance chains and blockchain technology to support the real economy, such as supply chain finance, data sharing, and government systems, can all be done.

Moderator: I am asking a question. The so-called fundraising to the public actually has some vague areas. For example, pre-sale products or points, is this a fundraising to the public?

Liu Xiaolei: Teacher Meng Yan asked very good questions. I think the supervision is very clear. For example, go to a beauty shop and buy a card. This is a pre-sale. After you buy the card, it is also called the point, called Token also, actually borrowing money from the owner, he is financing me.

So why is this financing allowed? Because it is for a specific individual. Why is it specific? Because I am his client, I am his consumer group. He does not need to pay me back in the future. He can return it to me. This is very typical.

Conversely, if he raises a multi-purpose service card to a person who does not need him, he needs a license. Many people think it doesn't matter to send a credit. In fact, the points are equivalent to the company financing the customer, so it is very clear that I am his customer. If the points are traded on the market casually, it becomes a financing to unspecified individuals, which is not allowed.  Singapore

Li Guoquan: In Singapore, the certificate can be divided into three types: one is the payment type certificate, the other is the application type certificate, and the third is the securities type certificate.

Securities-type pass, there is a corresponding law already in place; application-type pass, it is not within the regulations, you can implement it according to your own opinions; payment-type pass, we have a new decree recently, and are discussing in Congress.

However, it is worth noting that the payment-type pass, if the amount of custody does not exceed 5 million Singapore dollars (about 2.5 million yuan), is not within the statute. Therefore, it has a moderate degree, and the requirements for companies with higher risks are more stringent. But if your hosting amount is less than 5 million, you may not need to adapt to the regulations, because you may not pose systemic risks.  Hong Kong, China

Gan Liqing: I think that all things that cannot be done on the mainland are recommended to go to Hong Kong. This is really the case. I have been in Hong Kong for more than ten years. From traditional finance to the blockchain industry, I clearly see that the Hong Kong government is an inclusive mentality towards the blockchain.

On November 1 last year, the Hong Kong Securities Regulatory Commission issued regulations on virtual assets, including regulations on exchanges, public links, and project parties. On March 28 this year, the Hong Kong Securities Regulatory Commission issued a statement on the issuance of securities-type tokens to remind companies that engage in securities-based tokens to apply regulatory requirements.

It can be seen that Hong Kong's regulatory strategy is clear and clear, and it is now also introducing a regulatory sandbox. Therefore, I strongly encourage everyone to come to Hong Kong. There is no problem in technology development on the mainland. But if you want to do the pass and involve the issue of issuing coins, I suggest that it is better to come to Hong Kong.

In the future, Hong Kong will also issue virtual assets, or even exchange licenses, which will be a very positive guide for the industry. I welcome everyone to go to Hong Kong and use Hong Kong as your key place to develop your next business. Moderator: Can you tell us more about Hong Kong's regulatory sandbox?

Gan Liqing: At present, Hong Kong adopts three strategies for monitoring the sandbox industry, namely the China Securities Regulatory Commission, the Financial Management Bureau and the Insurance Regulatory Bureau. This is in fact the same as the United Kingdom and Singapore.

Traditional securities financing, trading, and investment advisors have 1, 2, 4, 6, and 9 licenses. You only need to do some pre-communication based on traditional licenses. However, it should be noted that when doing virtual asset trading business, it is recommended that you go to the sandbox for a 6-12 month trial run. If the operation process is ok, a license will be issued to you. According to our understanding, there are already 6 players in the industry who are queuing for a license. Of course, the whole process is confidential. This is the regulation of the CSRC.  Other countries

Deng Chao: In the past two or three months, I have researched in various countries around the world. Every place has its own characteristics. The global supervision situation can be roughly divided into three echelons:

The first echelon, the most mainstream regulator represented by the United States, has a greater influence on the guiding role of blockchain and digital assets; the second echelon, the traditional financial sector has more strength, but also Regulators of strong economies, such as Hong Kong, Singapore, Japan, South Korea, France, Germany and Switzerland; third echelon, emerging markets such as Vietnam, Thailand, the Philippines, Dubai, etc.

Strictly speaking, it is difficult to say which area has consistent regulatory requirements. What I see is the global mainstream regulators who are adopting a pragmatic and cautious approach to the blockchain sector. For example, the United States mainly focuses on whether it is a security issue; France, it is said that there will be a policy of blockchain friendly in September. Switzerland, more from a financial perspective, many projects are hoping to get a more friendly banking license for the blockchain in Switzerland, opening up the field of legal currency and digital assets.

Looking at the Asian region, South Korea and Japan are worthy of attention. They took a relatively high position in 2016 and 2017, and then they began to be cautious. As for Hong Kong, we have just warmly welcomed everyone to Hong Kong. According to our contacts with the regulatory authorities, the guidelines for the supervision of virtual assets issued by the Hong Kong Securities and Futures Commission on November 1 last year mainly focused on who the group is, that is, qualified investors. For the practitioners, which type of business do you want to do, you will get the corresponding issuance license; if you do the transaction, you should pay attention to the line of the sandbox that you just mentioned; for asset management, you must follow the 9 License; if your assets are defined as security, you still have to manage them according to traditional assets, in accordance with traditional securities.

Second, on the practical pass


Moderator: Just now everyone mentioned the practical pass and the securities pass. Not long ago, the US SEC issued the first no-objection letter. There is a saying. For this Token, first of all, you can’t use the proceeds from its pre-sales. Develop the product, and it should be that once the Token is issued, a system is supporting and using it. Second, you can convert the Token back into US dollars, but the amount of the exchange cannot exceed the amount you prepaid at the time. In contrast, Singapore is much more relaxed in this regard. If we want to go to Singapore or Hong Kong, what issues do we need to pay attention to?

Li Guoquan: I think the best place in Singapore is to go directly to the central bank. The main attitude of the central bank is that in terms of supervision, it does not want to be offside, and it does not want to be absent. It must be in place. It will conduct all in-depth research on all the latest products, including practical forms, including ICO, IEO, etc., and then follow up.

When there is a systemic risk, it will take a year or two to study the new regulations. So your space usually has a year or two. And it won't conflict with past regulations. So now that you don't break the law, you should not break the law in the future. It will give you a space.

If you have a question about practicality in Singapore, you should just talk to the regulator and find a way to recognize it. But if the bank needs to open an account for you, the problem is big, because you can't expand your business, so I may not be able to answer this question directly. Moderator: I don't know if there is any provision for a practical pass in Hong Kong?

Gan Liqing: We have analyzed this case. The Token it sends is essentially the concept of a shopping voucher, so it is not a security. Hong Kong here judges whether a Token is a security or not. It will refer to the United States' Howe test. There are four key points: 1. Is your core investor a money contribution, 2. Is the investment a common cause, 3. This thing Will it depend on the efforts of third parties to achieve it? 4. Will investors have psychological expectations, appreciation or dividends?

To satisfy these four points, it must be a security, and there is no doubt at all. Currently in the eyes of the Hong Kong Securities Regulatory Commission, it only believes that Bitcoin and Ethereum are not securities, others are, and even derivatives based on Bitcoin and Ethereum, are also securities. A securities pass cannot be done, but if it is legal and compliant, the main body of the establishment will set up the main body, and the license will be licensed. The Compliance Officer will hire a compliance officer. 27281558245107_.pic

Third, the need for license supervision

Moderator: I would like to ask Teacher Liu Xiaolei a question, because you have many opportunities to participate in the high-level discussions. We all know that finance is a field of heavy supervision. All financial activities must be licensed and basically supervised. Since it is a discussion question, can we not take a step back and see why so many rules are formulated? Why are so many decision-making powers decided by the big ones sitting on the financial street or the central bank, not the entrepreneurs? Including what kind of securities a company can issue? What kind of rights do these securities have to be bound? When should I issue, issue, how much, and where to trade? What is the logic behind regulation? How did we get to this step?

Liu Xiaolei: I only say my own understanding and do not represent any understanding of the regulatory level. In fact, some of our regulatory authorities actually know very well about technology and industry, but China also has its own characteristics, that is, the market is very large. When a product is launched, it is cultivated very quickly in the Chinese domestic market. I thought that P2P developed in China for a year, surpassing the development of P2P in the United States for so many years. The blockchain is the same, and the outbreak is very fast.

The supervision is lagging behind. This is not unique to China. The supervision of all countries in the world is lagging behind in a certain sense. After all, you cannot change the situation, so the lag is inevitable. Especially because of financial sensitivity, the US Nasdaq bubble has little impact, but the impact of the 2008 financial crisis is very far-reaching. Because finance is an accelerator, so the impact is far-reaching, and our supervision is very cautious and there is sufficient reason.

We are now licensed to supervise, that is, we issue licenses and supervise in this way, but we hope to transform into behavioral regulation. Of course, many of them are already doing this direction. Behavioral supervision. For more regulatory requirements, you need to distinguish whether this behavior is compliant, but the regulator is already making such changes and attempts, so I am cautiously optimistic.

Fourth, reflection and outlook

Moderator: Ask a particularly challenging question. If you are a regulator, please answer me from two angles: 1. What do you think is the main lesson of global regulation in the past two years? What did you do wrong? 2. Looking to the future, when do you think that supervision can have a new idea, let us develop a more balanced industry?


Deng Chao: For the first question, I think it may not be a mistake. In the past, the supervision and industry communication, everyone is more cautious. If the channels and frequencies of regulation and industry communication can be increased, each other's satisfaction will be higher.

The second question is about when the supervision is more clear, or to make everyone more aware. I think, as Mr. Liu said, supervision is lagging behind, the industry is moving forward, and supervision is pulling here. The blockchain is still in the stage of technology research and development. When it comes to commercial applications, it involves financial issues. The supervision must know what you are going to do. I think that the technology, commerce and personnel of the industry have reached a certain stage of stability. When forming, the regulation will be clearer. 27271558245057_.pic

Gan Liqing: Actually, I very much agree with Mr. Deng’s opinion. The first question, supervision must be benign interaction with the industry, listening to the voice of the industry, in order to make a reasonable regulatory decision. In the process of issuing all policies in Hong Kong, we will consult with the industry for 3-6 months. After receiving some feedback from the industry, we will give supervisory opinions.

The second question is when is regulation possible. Our judgment is that various regulatory authorities are also competing, just as Hong Kong and Singapore also have a competitive relationship. Because benign supervision will make this industry develop explosively, Hong Kong has seen this, so it is also actively synchronizing with Singapore in the supervision sandbox. I believe that the sandbox will issue a legal license after 6-12 months. Whether it is Singapore or Hong Kong first, after the license is issued, the spring of the industry will come. 27261558245029_.pic

Li Guoquan: I think that regulation itself has always been balanced between innovation, security and stability, and they don't want to spend too much time. From the perspective of Singapore, the first line is corporate governance, which clearly writes down all the regulations, allowing the company to decide which aspects to innovate and which will not affect the entire system. On the other hand, many regulators have their own innovation department, the director of big data, and the director of blockchain innovation. He himself will directly participate in the industry to gain a deep understanding of what they are doing. From these two perspectives, both regulation and community should be the nodes of blockchain governance.


Liu Xiaolei: Many of our innovations are generated in the game of supervision, which is not the case in China. Large denomination deposits were introduced during the US interest rate regulation in the 1970s, which was also the result of regulatory arbitrage. Due to the lag of supervision, its original terms can not adapt to the development of new technologies. Can I have some innovations? Can supervision be adequately inclusive and let it try? From this perspective, I think the regulatory sandbox is indeed a very good and recommendable system.

V. About regulatory technology

Moderator: Last question, regarding regulatory technology, we know that the blockchain provides a new possibility of supervising technology, so-called open supervision or decentralized regulation, if you put all the books, data, processes Smart contracts are placed on the blockchain. In this case, is it possible to construct a new regulatory model? Is this model possible in our country?

Liu Xiaolei: Actually, there are many cases of regulatory technology based on blockchain, including cases in which our BAT and some local governments have applications. But my understanding is that there is still a difference between this kind of application and the kind of self-regulation that you are talking about. It is still necessary to have a regulatory agency in it. I would like to mention an analogy that may not be particularly appropriate. We are now talking about the science and technology board, changing the registration system. We require more disclosures and require delisting. In fact, to a certain extent, as long as you disclose, everyone knows that you are good or bad. If you do not let the market delisted, you are already going in this direction, but if you don’t supervise it at all, I think that for a long time, I can't see it coming to China.

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