The price of bitcoin is climbing like a rocket.

Recently, the price of Bitcoin, like a rocket, steadily climbing, as of November 18, 1 Bitcoin has reached 3490 yuan, and in one months ago, this price is only about 1000 yuan, which means one months time, Bitcoin rose about 249%. Three years ago, 1 dollars can buy 1300, now to the geometric progression to 560 U.S. dollars a Bitcoin, according to the highest price of 900 U.S. dollars per bitcoin, three years in the boom 1.17 million times times. The internet exclaimed: Human beings have been unable to stop the rise of bitcoin.

Bitcoin is a virtual currency

A more successful

Four years ago, Bitcoin was invented by a nameless scientist to circulate in a Peer-to-peer computer network as an encrypted electronic currency. People who prefer to use Bitcoin think that it is not only a substitute for central banks to issue money, but also a cheaper alternative to the global banking system. Bitcoin is one of the more successful virtual currencies.

Virtual currency, also known as electronic money, is called virtual currency because of its fully digitized characteristics. The virtual currency has the whole product life cycle characteristic, it appears in the currency issue and the organization admittance all presents the new characteristic: the fictitious currency itself stability and the solidity, the fictitious money redemption question all has challenged to the financial stability , the virtual nature of virtual currency and the trans-temporal characteristics of Cross-border Transactions challenge the financial regulation activities such as anti-money laundering. With the development of E-commerce in China, the rapid development of electronic payment, a variety of network payment products are endless, to Tencent, NetEase and other sites for the representative, has launched a Q-coin, NetEase card and other virtual currencies, and rapid growth in trading volume.

The beginning of virtual currency

Different regulatory attitudes in Europe and America

Many new features of virtual currency become the focus of competition and financial supervision of financial institutions. The United States and Europe adopted a completely different attitude when the virtual currency, the electronic money, first appeared.

As the Fed takes a wait-and-see attitude, the former chairman of the Federal Reserve, Alan Greenspan, is emphasizing the importance of innovation, and Mr Gray believes that early rules can easily hinder innovation, and in many cases self-regulation is a better strategy. The Fed sees the virtual currency as an alternative payment tool.

In contrast to America's wait-and-see strategy, the European Monetary Authority has adopted a prudent regulatory strategy. As early as 1994, the European monetary authorities suggested that only credit institutions such as banks could issue virtual currencies, and the European Central Bank reiterated in 1998 that some European countries had changed their laws accordingly, as in Germany's new regulations, which required only banks to allow the issue of virtual currencies. But EU law does not prohibit non-bank institutions from cooperating with banks, the development of virtual currency products, or their own independent investment to open a bank to engage in virtual currency management, but must meet three conditions: first, only in the domestic provision of services;

Europe is concerned with the theoretical concept of virtual currency, the concept of currency, the rules of the United States more pragmatic, the virtual currency without strict restrictions, such as the absence of redemption requirements, the adoption of more lenient investment restrictions.

The United States mainly through the "Uniform Commercial Code", "Electronic Funds Transfer Act" to complete the regulation of virtual currency. The U.S. regulations on electronic payments are divided into federal and state legislation, which are based on different types of financial institutions and the types of products paid. In Europe, the rules governing the payment of products are less targeted than in the United States. In addition, for some payment systems and payment instruments, Europe is more regulated to ensure its normal operation.

The Basel Committee emphasizes

Monitoring of reputation and operational risk

The Basel Committee has linked electronic banking and virtual currency to consider regulatory issues under electronic conditions, and has placed greater emphasis on monitoring and management of risks arising from technical factors such as reputational risk and operational risk.

Virtual currency, because of its virtuality and trans-temporal characteristics, reduces transaction costs and accelerates financial services, but also increases the difficulty of regulation. Because the virtual currency relies on the Bank computer network system and the international Financial Transaction network is open and shared, it is easy to produce the legal liability dispute in the process of virtual currency transmission. At the same time, computer crime, computer hackers to the financial institutions of the computer system of the security of the damage or to the customer's property caused damage, counterfeiting, fraudulent use, theft of virtual money and other fraudulent activities often have concealment, location uncertainty, cross-regional or trans-international, damage the severity of the results of the characteristics. Therefore, the traditional financial law in the financial institutions and the protection of the interests of customers put forward a serious challenge.

According to the requirements of the new Basel Accord, the effective regulatory framework of virtual currency can be embodied in the following two aspects.

First, the principle of virtual currency regulation. Financial supervision is a double-edged sword, on the one hand, effective financial supervision can maintain financial market stability, timely discovery of financial risks, control of financial risks, maintenance of effective market order; On the other hand, excessively strict financial supervision may restrain financial innovation, and financial innovation is the driving force of modern financial development, Therefore, the principle of virtual currency regulation should be prudent, timely and appropriate. In other words, in the appropriate time to take timely countermeasures, not only to ensure the healthy development of virtual currency, but also to effectively protect against financial risks.

The second is the virtual currency regulatory framework. Although the objectives of financial regulation are different in the world, they are generally aimed at maintaining the stability and credibility of the financial system, protecting the interests of depositors and promoting the good implementation of monetary policy.

Virtual currency can be issued by non-credit institutions, in the modern financial system, the virtual currency has been very few and gold and silver and other physical currencies, most of the virtual currency issue in the central bank issued by the currency of the corresponding. The currency issued by the central bank is secured by the credit of the central bank, the issue of virtual currency is very similar to the issuance of the early bank coupons, to the credit of the institution that issued the virtual currency, so without a good regulatory system, the issue of a currency letter of a fictitious monetary institution will affect the development of the virtual currency of the whole society, It even causes the devaluation of the whole social currency caused by the depreciation of the virtual currency currency of a certain institution, or the inflation caused by the excessive circulation of the virtual currency of a certain institution, which in turn affects the stability and economic development of the financial system.

Prudential regulation of virtual currency can include three functions: management (Management of products and transactions), control (monitoring of the above management) and supervision (regulation of the entire financial system). In order to achieve effective supervision, in addition to the central bank, industry self-discipline and institutional self-management is also necessary.

Because the essence of modern financial supervision is the monitoring of financial risk, Virtual currency supervision mechanism can be concentrated in the following 6 aspects: 1. Virtual currency issuing institutions market access supervision; 2. To establish a sound crisis management and market exit mechanism; 3. Establish the system of fictitious currency issuing and reporting and the mechanism of virtual currency total monitoring; 4. The Redemption policy or reserve guarantee for the issued virtual currency; 5. Monitoring through on-site and off-site audits; 6. Establishing Regulatory requirements Fan's information disclosure system.

If management can set up a detailed system of virtual currency regulation from the above framework and regulatory mechanism, humans can still manage Bitcoin. (The author is associate professor of finance and Finance, Renmin University of China, Ph. D.)