On December 5, recently, concepts related to virtual currencies have been rapidly gaining popularity. Some criminals are taking the opportunity to promote illegal fundraising and pyramid schemes under the guise of stablecoins, air coins (such as π coins), real-world asset (RWA) tokens, and 'mining', and are using virtual currencies to transfer the proceeds of illegal activities, seriously harming the property safety of the public and disrupting the normal order of the economy and finance.
In order to further implement the requirements of the People's Bank of China, the Financial Regulatory Administration, the China Securities Regulatory Commission, and other departments (regarding the prevention of risks related to token issuance and financing) (regarding further prevention and handling of risks related to virtual currency trading speculation), and to implement the spirit of the meeting on coordinating the fight against virtual currency trading speculation, the China Internet Finance Association, the China Banking Association, the China Securities Association, the China Securities Investment Fund Association, the China Futures Association, the China Listed Companies Association, and the China Payment and Clearing Association jointly provide the following risk warnings:
1. Correctly understand the essential attributes of virtual currencies, real-world asset tokens, and related activities.
Regulatory authorities emphasize that virtual currencies do not have legal tender status and cannot be circulated or used domestically. 'Air coins' like Pi coin have insufficient technology and value support, leading to frequent scams; stablecoins pose a high risk of being used for money laundering, fraud, and illegal cross-border fund transfers. The tokenization of real-world assets (RWA Token) also carries risks such as false assets and speculative trading, and no such projects have been approved domestically. Organizations or individuals engaged in related activities may be suspected of illegal issuance of token vouchers, illegal fundraising, and unauthorized public issuance of securities.
2. Relevant institutions must not engage in any business related to virtual currencies or real-world asset tokens.
Member units must not participate in or provide any form of support for the issuance and trading of virtual currencies or RWA. Banks and payment institutions must not provide accounts, payment, credit, or other services for related activities; securities, funds, and futures institutions must not provide services for related products; internet platforms must not provide publicity or technical support for related projects. Institutions must strengthen due diligence and must report any identified risk clues in a timely manner.
Third, the public must remain highly vigilant against all forms of virtual currency and real-world asset token business activities.
Virtual currencies are highly volatile and scams are frequent; the public needs to raise their risk awareness and avoid participating in any form of virtual currency, RWA trading, promotion, or 'mining' projects, and be cautious of false advertising or inducements from investment groups. Any clues suspected of illegal activities should be actively reported to regulatory authorities or the police.
On December 5, today, the China Internet Finance Association and six other associations jointly issued a notice 'on preventing illegal activities related to virtual currencies,' stating that virtual currencies cannot be circulated or used as currency in China. The financial regulatory authorities of our country have not approved any tokenization activities related to real-world assets. Relevant institutions must not engage in any business related to virtual currencies or real-world asset tokens.
The last time the China Internet Finance Association jointly issued a notice on April 13, 2022, 'on preventing financial risks related to NFTs,' firmly curbing the financialization and securitization tendencies of NFTs, strictly preventing illegal financial activity risks, and consciously complying with behavioral norms. It jointly calls on member units: not to directly or indirectly invest in NFTs, and not to provide financing support for NFT investments. Not to weaken the non-fungible characteristics of NFTs through methods such as splitting ownership or bulk creation, which would indirectly conduct token issuance financing (ICO). Not to include financial assets such as securities, insurance, credit, and precious metals in the underlying goods of NFTs, thereby indirectly issuing and trading financial products.
The NFT market gradually entered a bear market after its popularity began to wane in March of that year, and the FTX collapse in November further drained funds and market confidence during the bear market; the NFT market's popularity has decreased year by year, and it has gradually become 'neglected'.
On December 5, the China Internet Finance Association, in conjunction with multiple departments, issued the latest risk warning on preventing illegal activities related to virtual currencies. It has been three years since the cryptocurrency risk warning in 2022. Over the past five years, the Internet Finance Association has continuously released four major announcements at key points of market speculation.
On April 13, 2022, a notice (on preventing financial risks related to NFTs) was released, firmly curbing the financialization and securitization tendencies of NFTs. It clearly requires that virtual currencies such as Bitcoin must not be used as pricing and settlement tools for NFT issuance and trading, and financing support for NFT trading must not be provided. This document led to a rapid cooling of the domestic 'digital collectibles' market. Major platforms like Tencent's Huanhe and Alibaba's Whale Exploration subsequently tightened transfer rules, and many small and medium-sized digital collectible platforms shut down due to liquidity exhaustion, leading to the collapse of the domestic NFT speculative bubble.
On May 18, 2021, a notice (on preventing the risks of speculative trading in virtual currencies) was issued, reiterating that virtual currency trading contracts are not legally protected. Financial institutions and payment institutions are prohibited from engaging in any business related to virtual currencies (such as account opening, registration, trading, clearing, and settlement). The day after the announcement (May 19, 2021), panic spread in the market, and Bitcoin's one-day decline exceeded 30%, briefly falling below the $30,000 mark from above $43,000, with the total liquidation amount setting a historical record.
On April 2, 2020, a notice (on the risks of participating in speculative trading on overseas virtual currency platforms) was released, pointing out that overseas platforms are not protected by Chinese law and generally have issues such as fabricated trading data and malicious outages that manipulate the market. This document marked an increase in regulatory attention to 'overseas' exchanges. Subsequently, the crackdown on domestic virtual currency OTC (over-the-counter) funding channels significantly intensified, leading to a large-scale emergence of 'frozen card' incidents.
