Negative news in the cryptocurrency circle continues to increase, and virtual currencies are being cleared out faster under strict supervision

As of press time on July 20, data from the Bitcoin Home website showed that the price of Bitcoin fell below $30,000 to $29,602, a 5.82% drop in the past 24 hours. The highest price of Bitcoin was $31,447 and the lowest was $29,602. In the past seven days, it has fallen by 6.97%.

Recently, the cryptocurrency industry has been plagued by negative news. Many cryptocurrency industry leaders have announced their retirement, and the cryptocurrency exchange Binance has announced that it will stop supporting stock token-related trading services.

Under increasing regulatory pressure, the liquidation of virtual currencies has accelerated.

Binance stops supporting “stock tokens”

Recently, the cryptocurrency exchange Binance announced that it will stop supporting stock token-related trading services, and users will no longer be able to purchase stock-related digital tokens.

Binance said on its exchange platform website that stock tokens will not be available for purchase on Binance, effective immediately, and all support will be stopped in October, and the company will shift its business focus to offering other products.

The so-called stock token refers to the use of cryptocurrency to trade stocks, and the stock assets involved are managed by the token issuer. In the view of many analysts, the potential risks brought by the promotion of stock tokens have not been assessed, and direct development is not feasible, which is likely to disrupt the financial market.

On July 16, the Hong Kong Securities and Futures Commission pointed out in the "Warning Statement on Unregulated Virtual Asset Platforms" that it has noticed that Binance has provided stock token trading services in multiple jurisdictions and is concerned that these services may also be provided to Hong Kong investors. The Hong Kong Securities and Futures Commission clearly pointed out that no entity under the Binance Group has been licensed or registered to conduct "regulated activities" in Hong Kong.

The Hong Kong Securities and Futures Commission warns that if stock tokens are "securities", the promotion and/or distribution of such tokens - whether conducted in Hong Kong or targeting Hong Kong investors - constitutes a "regulated activity" and requires a license from the Securities and Futures Commission, unless it falls within the scope of an applicable exemption. It may also be illegal for anyone to sell such tokens to the Hong Kong public without the authorization or registration of the Securities and Futures Commission.

Industry observer Su Xiaorui told Caixin that the fact that Binance was named and notified by the Hong Kong Securities and Futures Commission to a certain extent reflects the strict attitude of Hong Kong's regulators. Behaviors such as providing tokens need to be regulated and carried out within the regulatory framework. Currently, cryptocurrency exchanges are operating in Hong Kong without a license, which may constitute a risk of illegal operation.

Previously, Germany’s financial regulator also warned investors that Binance may have violated securities trading rules by supporting stock token trading.

Many cryptocurrency tycoons quit

In fact, under the storm of virtual currency regulation, the gradual withdrawal of the industry has become a foregone conclusion. Against this background, many big names in the cryptocurrency circle have recently announced their withdrawal from the circle.

On July 17, one of the co-founders of Ethereum said that he would no longer be involved in the field of cryptocurrency. He also said that he was no longer keen on virtual currencies and that he felt insecure in this circle. However, he refused to disclose the amount of virtual currencies he currently held.

As of press time, the unit price of Ethereum was US$1,745.80 (approximately RMB 11,311), down 7.31% in 24 hours.

Previously, one of the founders of Dogecoin also made harsh criticisms of encryption technology through social media, saying that after years of research, he believed that the main purpose of virtual currency is to magnify the wealth of its supporters through a combination of tax avoidance, regulatory evasion and artificially enforced scarcity, and vowed never to set foot in the currency circle again in his life.

In the industry's view, the regulatory authorities are gradually tightening their supervision of virtual currencies. In the foreseeable future, the path for virtual currency speculation may be completely blocked, and all cryptocurrency institutions will face rectification.

Su Xiaorui said that the main business of virtual currency service agencies includes traffic acquisition, brand promotion, user operation, transaction transfer, etc. The speculation of virtual currency is difficult to bring actual value to the service of the real economy.

On July 15, the digital currency information website CoinWorld released an announcement stating that in accordance with the terms of the central bank's business management department's document related to the virtual currency field, and in actively cooperating with the regulatory authorities' industry rectification requirements, the CoinWorld APP and website will cease operations in China from now on.

Since the beginning of this year, the risks of virtual currencies have continued to be exposed. As the regulatory authorities’ understanding of virtual currencies continues to deepen, supervision has also been continuously upgraded.

Since the advent of Bitcoin, the private sector has launched various so-called cryptocurrencies. According to incomplete statistics, there are currently more than 10,000 influential cryptocurrencies with a total market value of over 1.3 trillion US dollars. Bitcoin and other cryptocurrencies use blockchain and encryption technology, claiming to be "decentralized" and "completely anonymous", but lack of value support, sharp price fluctuations, low transaction efficiency, and huge energy consumption make it difficult for them to play the role of currency in daily economic activities.

On July 16, the central bank released the "White Paper on the Research and Development Progress of China's Digital RMB", pointing out that cryptocurrencies are mostly used for speculation, posing potential risks that threaten financial security and social stability, and have become a payment tool for illegal economic activities such as money laundering. In response to the defects of large price fluctuations of cryptocurrencies, some commercial institutions have launched so-called "stablecoins" in an attempt to maintain currency stability by anchoring them to sovereign currencies or related assets. Some commercial institutions plan to launch global stablecoins, which will bring many risks and challenges to the international monetary system, payment and clearing system, monetary policy, and cross-border capital flow management.

Fan Yifei, deputy governor of the People's Bank of China, also recently stated that private digital currencies including Bitcoin and various "stablecoins" have become a speculative tool and a payment tool for some money laundering and illegal economic activities. They pose a potential threat to financial security and social stability, and may bring risks and challenges to the international monetary system, payment and clearing systems, etc.

Earlier, the Internet Finance Association of China, the China Banking Association and the China Payment and Clearing Association jointly issued an announcement on May 18, requiring financial institutions and payment institutions not to conduct virtual currency-related businesses.