Experts: Seven reasons why Chinese regulators have closed Bitcoin Exchange

nnMr. Yang Dong, Vice Dean of the School of Law, Renmin University of China, Director of the Center for Financial Technology and Security Research, delivered a speech at a seminar attended by several domestic regulators. Recently he was interviewed to elaborate on the reasons for the closure of the spot currency exchange in China. Including the nature of Bitcoin, risk and domestic regulatory licensing.n
nTranslation: Annie_Xun
Yang Dong is vice president of law school of Renmin University of China, director of financial technology and security research center. He delivered speeches at various seminars, including regulators such as the Bank of China and the Securities and Futures Commission, as well as academics, think tanks and lawyers.n
In the CCTV interview, he raised a number of reasons why regulators close the domestic spot currency exchange.n

Yang Dongn
No licensen
The first thing he mentioned was about the license. He said that financial institutions must obtain business licenses, such as the CBRC and the CIRC.n
n”At present, the domestic virtual currency trading platform lacks the relevant legal permission, so that the virtual currency trading platform from the existing regulatory system.In fact, there is a considerable business risk.n
Bitter currencyn
The second point is the nature of the coin itself. “The mechanism of limiting the amount of money by a particular code is inherently controversial,” “it might create a new encryption system, or modify existing algorithms, and the amount of encrypted currency issuance may be increased.”n
In addition, he mentioned the bitter currency price fluctuations. Pointing out that the digital currency lacks a “clear value base”. “Because there is no assessment of the demand for special currency and its inherent economic fundamentals, the market investment environment led to dramatic fluctuations in prices.” Blind follow the trend of investors may encounter great losses.n
Moreover, he said that the encrypted currency “is not affected by inflation factors and exchange rate changes and other issues.”n
Money laundering and pyramid scamn
Professor’s third view revolves around how digital money transactions are used for money laundering and financial fraud, and how to avoid foreign exchange controls.n
n”Because virtual currency has no borders, cross-border payments through virtual currency can avoid foreign exchange controls, and therefore need to prevent capital projects from being completely open to countries and economies for anonymous transactions.”n
nAfter that, he continued to mention pyramid scams and other fraudulent use of digital money.n
Market manipulation and security issuesn
Yang Dong’s fifth point is the market manipulation problem. Anyone who can only invest tens of millions of dollars can easily control the price, let it soar. All losses are passed on to the information channel, no capital advantage of ordinary investors who.n
His sixth point is security risk. “Data risk and information security risks are intertwined.” He said that if the security system is not strong enough, hackers can steal bit currency, resulting in a large amount of data loss and irreparable damage.n
Dark net tradingn
His last point is that Bitcoin is used in the dark market, where there is a lack of regulation.n
n”There is no strict protection against netting transactions, and will not strictly enforce anti-money laundering, KYC and other effective measures, and even intends to support anonymous transactions, the government can not effectively monitor the defects of the dark network.”n

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