$BTC Why does China not allow virtual currency trading platforms to exist?

China prohibits the existence of virtual currency trading platforms. The main reason is that it does not want virtual currency to become a speculative tool to disrupt the financial order. The specific reasons can be analyzed from the following aspects:

1. Legal risks and investor protection issues: The price of virtual currency fluctuates violently, and the investor protection mechanism is missing. Because virtual currency is a product of networking, its flowing digital information cannot be controlled by anyone. Virtual currency itself has no value reference, lacks a pricing mechanism, and relies entirely on speculation. Investor education and knowledge popularization in this regard are lacking, which will cause investors to face huge market risks and financial risks.

2. Market and financial risks: The regulatory authorities closed virtual currency exchanges mainly from the three aspects of market risk, financial risk and social risk. This shows that virtual currency transactions may pose a threat to the stability of the financial market and the financial security of investors.

3. Risks of illegal financial activities: The notice issued by the People's Bank of China clearly mentioned that virtual currency-related business activities are illegal financial activities, including the exchange of legal currency and virtual currency, the exchange of virtual currency, etc., especially the rampant "money laundering" activities. In addition, virtual currency is a global transaction, which can easily break through the control of foreign exchange and easily lead to illegal capital flight.

4. National security and social stability: The Chinese government is worried that virtual currency transactions may be used for money laundering and other illegal activities, which not only violates the law, but may also threaten national security and social stability.

5. Supervision and enforcement of legal provisions: The Chinese government has issued notices many times to explicitly prohibit virtual currency transactions and mining activities. Individuals and companies that violate the regulations will face legal consequences, including criminal liability.

In summary, the main reason why China prohibits the existence of virtual currency trading platforms is out of concern for market and financial risks, as well as prevention of illegal financial activities and national security threats.

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