10 arrangements that might change the future of Chinese bitcoin exchanges
Blockchain Research Institute of China held a conference about blockchain regulation on Febuary,17th at Museum of Internet Finance. Huo Xuewen delivered a speech about current blockchain and bitcoin regulation in China that led to a heated discussion among 50 participants. All directors of Blockchain Research Institute of China agreed to strengthen regulation on blockchain companies. A set of 10 self-regulation rules were proposed by the participants, mostly Chinese bitcoin exchanges, on the meeting.
Wu Xiaoling, former deputy governor of People’s Bank of China, Wei Yingning, former vice president of China Insurance Regulatory Commission, Xu Xingming, founder and CEO of OkCoin, Peng Yaojie, vice president of Credit China Holdings Limited, Wang Yongli, CEO of Le Finance and other industrial players and experts were present at the meeting.
Xu Xingming, president of Blockchain Research Institute of China, wished to strengthen regulation on blockchain companies through 9 ways concerning compliance department, credible and manageable blockchain system, financial orders, registration, improving users’ awareness, anti-money laundering and anti-telecommunications fraud, anti-multi-level marketing, anti- market manipulation and embezzlement and information sharing system. In addition, Wu Xiaoling, former governor of People’s Bank of China, suggested that individual privacy should also be emphasized, which was agreed by all attendees.
10 self-regulation arrangement of Chinese Blockchain sectors
No.1: Setting up a compliance department: Blockchain companies are supposed to have a compliance department and staff members responsible for risk management and compliance evaluation as a way of complying with the rules and regulations of relevant government watchdogs.
No.2: Credible and manageable blockchain system: Establish scientific blockchain management framework and multiple security mechanism. Blockchain system must be tested and accessed by a third party to make it credible, objective and manageable.
No.3: Complying with financial orders: Blockchain companies in financial community should stick to their professional ethics when providing technological service. They should work with licensed companies to reject any requests from a risky company or organization and fight against money laundering through identity management.
No.4: Registration: Service providers for Chinese users should register their company names, legal persons, business models and risk control methods to local regulators.
No.5: Improve users’ awareness: Blockchain companies should remind users of the risks to make them objective to blockchain and they are allowed to encourage users to invest blockchain-related business. In addition, their operation should be in compliance with Advertisement Law of the People’s Republic of China and refrain themselves from launching or getting involved with such fundraising initiatives as ICO.
No.6: Anti-money laundering and anti-telecommunications fraud: Exchanges should comply with anti-money laundering rules of opening a real-name account, identified trade and “single card policy”. Blockchain companies should work to avoid fake accounts by updating real-name system through video identification and biometrics and report suspicious transactions to regulators.
No.7:Anti-multi-level marketing: According to regulators, risk control methods and technologies should be adopted, such as an annual withdrawal limits per person. And it will take more time for those first withdrawing coins so as to reduce possible losses.
No.8: No market manipulation and embezzlement: Trading platforms and key staff members with inside information should not make any transactions to manipulate market. Service charges standards made by self-regulation committee must be strictly observed to avoid fake transactions, leveraged and financing transactions. Besides, capitals of platform users should be kept by a third party.
No.9: Information sharing system: An information sharing mechanism should be established where blockchain companies and trading platforms can share their whitelists and blacklists with each other and work with regulators to eliminate suspicious transactions, trying to set up a multinational mechanism to fight against money laundering around the world.
N0.10: Protect individual privacy: The security of digital assets represents the security of personal property for digital asset is a form of personal property. In reality, however, the security of personal property can be threatened by possible privacy breaches, which requires each and every blockchain company to protect individual privacy.