Money laundering with Bitcoin is only a hypothesis, and it is more difficult than traditional methods

Recently, data from OKCoin, a well-known domestic Bitcoin trading platform, shows that Bitcoin has been rising for nearly three months, with a cumulative increase of more than 10%, and the highest price of Bitcoin has exceeded 5,100 yuan per coin. Compared with October 1, 2015, the price of Bitcoin has risen by more than 3,449 yuan, an increase of more than 200%. Coincidentally, this trend is almost synchronized with the depreciation of the RMB exchange rate. Industry insiders said that in the context of "asset shortage", the wealth effect of Bitcoin exceeds that of real estate. At the same time, there are market reports that Bitcoin is used by some people as an "underground highway" for "exchanging currency" because it can be traded in the international market.

Regarding the recent rapid rise of Bitcoin, there is a view in the market that Bitcoin has the natural feature of being able to "exchange currency", and RMB funds can be transferred abroad through "exchange currency". The so-called "exchange currency" refers to transferring Bitcoin from one trading platform to another trading platform, and then selling it through the platform to obtain foreign exchange. The underlying technology of Bitcoin is blockchain. The blockchain is composed of many nodes, and all nodes share all information of all transactions through a public ledger, so each node knows each other's situation inside out, ensuring that Bitcoin on the blockchain can be circulated at a high speed without obstacles, unlike traditional financial channels that require many trust agreements between links, which provides convenient conditions for "exchange currency".

In response to the market's view that there is an "underground bank" phenomenon of using Bitcoin to exchange for foreign exchange, Mr. Xu Mingxing, founder and CEO of OKCoin, China's leading Bitcoin trading platform, said:

"This is "impossible and unrealistic". Buying a large amount of Bitcoin in China will be subject to strict anti-money laundering investigations by trading platforms. For Bitcoin purchased from our OKCoin platform, we will first conduct relevant certification, including review of the source of funds, asset amount, etc. In addition, the "anti-money laundering" procedures of foreign banks and trading platforms are more complicated. If a sum of money or Bitcoin comes out of thin air, no foreign institution will allow you to withdraw cash. You need to provide proof of the legal source of funds. At the same time, the price of Bitcoin is constantly fluctuating. Exchanging currency through Bitcoin is a hypothetical operation, and its operation is much more difficult than traditional methods."

Finally, Xu Mingxing added:

“Technology is definitely not a means to bypass regulation and laws.”

In addition, regarding the statement that the central bank and other regulatory authorities are studying the introduction of restrictive measures, including restricting domestic trading platforms from transferring Bitcoin to overseas platforms, or limiting the amount of Bitcoin transferred to overseas platforms, Xu Mingxing, founder and chairman of OKCoin, said:

“Whether it is blockchain or Bitcoin, technology is by no means a means to evade regulation. We welcome regulatory authorities to establish regulatory standards to prevent blockchain and Bitcoin from being used for illegal purposes, which can better guide the healthy development of the industry.”