English
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 “Within the country, a prohibitive policy regarding virtual currencies is maintained; any related business activities are considered illegal financial practices and are strictly prohibited, with decisive legal action taken to eradicate them. ”On the evening of February 6, eight departments including the People’s Bank of China jointly issued the “Notice on Further Preventing and Addressing Risks Related to Virtual Currencies” (hereinafter referred to as the “Notice”), which explicitly stated that activities related to virtual currencies constitute illegal financial practices and are strictly prohibited within the country. ““An account loses half its value in one night,” “The trading platform becomes inaccessible suddenly,” “Stablecoins stop being stable…” Recently, there have been frequent instances of speculative activities related to the tokenization of virtual currencies and real-world assets (RWA), which disrupt economic and financial order and pose a serious threat to the safety of people’s assets. These huge risks have become a real concern for many investors in the virtual currency sector. On February 5, the day before the announcement was released, the price of Bitcoin fell below $70,000 for the first time since November 2024. The Bitcoin price index dropped to a low of $66,835 in the early hours of the 5th, marking a maximum decline of 9.74% in the past 24 hours. The prices of Ethereum, Solana, Binance Coin, and Doge also saw significant drops, resulting in many investors suffering heavy losses or even going bankrupt overnight. Virtual currencies are extremely risky because they are not, in essence, currencies at all and do not possess the same legal status as fiat money. Virtual currencies such as Bitcoin, Ethereum, and Tether are characterized by being issued not by monetary authorities, using cryptographic and distributed ledger technologies or similar methods, and existing in digital form. They do not possess legal tender status and should not nor can they be used as currency in the market. For a long time, our country has maintained a prohibitive policy stance regarding virtual currency-related business activities within its territory. In 2013, five departments including the People’s Bank of China jointly issued the “Notice on Preventing Risks Associated with Bitcoin,” which clarified that Bitcoin is a specific type of virtual commodity and should not be used as currency in market transactions. The "Notice on Further Preventing and Addressing the Risks Associated with the Trading and Speculation of Virtual Currencies," issued in 2021, further clarified that Bitcoin, Ethereum, as well as stablecoins such as Tether, do not possess the same legal status as fiat currencies. Conducting any business activities related to virtual currencies within China is considered illegal financial activity and is strictly prohibited. The “Notice” issued this time continues the policy stance of recent years, reiterating that virtual currencies do not possess the same legal status as legal tender. Conducting virtual currency-related business activities within China is considered illegal financial activity, and foreign entities and individuals are prohibited from providing virtual currency-related services to Chinese entities in any form whatsoever. Preventing and mitigating financial risks, especially systemic financial risks, is a fundamental task of financial work and an eternal theme in the field of finance. No matter how technology advances or how times change, the practice of using virtual currencies as a guise for illegal financial activities under the pretext of financial innovation will always be strictly prohibited. From preventing the risks associated with Bitcoin in 2013, to cracking down on speculative trading in 2021, and now this more comprehensive upgraded approach, the government’s stance on regulating virtual currencies and their variants has been consistent and clear. As an ordinary investor, it is crucial not to believe in any myths about getting rich overnight or receiving free money in the crypto world. Instead, establish a proper investment mindset, enhance your awareness of risks and your ability to identify them, and absolutely avoid participating in any activities related to virtual currencies or tokens representing real-world assets. Responsible Editor: Zhao Wen Editor: Xing Jiawei Source: People’s Daily Economic and Social Affairs ID: Reporter rmrbjjsh: Wu Qiuyu |
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