Author | Wu Says Blockchain
1. China announces large-scale stimulus measures
The People's Bank of China announced on September 24 the largest stimulus measures since the outbreak of the pandemic, aimed at pulling the economy out of the deflationary predicament and returning to the government's growth targets, including lowering borrowing costs, injecting more funds into the economy, and alleviating the burden of mortgage repayments for households. China's stock market and bond market rose, and Asian stock markets reached a two-and-a-half-year high. The exchange rate of the renminbi against the US dollar surged to a 16-month high.
On October 12, Chinese Minister of Finance Lan Fan'an stated at a press conference held by the State Council Information Office that they plan to increase the debt limit significantly in one go to replace local governments' stockpiled hidden debts and enhance support for local debt risk resolution. Relevant policies will be explained in detail to the public after fulfilling the necessary legal procedures. This policy is the most significant measure to support debt resolution introduced in recent years, which will greatly alleviate the pressure on local governments and free up more resources to support economic development.
The Ministry of Finance, based on the acceleration of the implementation of already determined policies, will soon launch a series of targeted incremental policy measures focused on stabilizing growth, expanding domestic demand, and mitigating risks. The Ministry of Finance will issue special government bonds to support large state-owned commercial banks in replenishing capital.
2. Hong Kong approves Bitcoin and Ethereum spot ETFs
In April 2024, the Securities and Futures Commission of Hong Kong (SFC) officially approved the first batch of spot exchange-traded funds (ETFs) for Bitcoin and Ethereum. This historic move provides investors with a more transparent, secure, and efficient channel for digital asset investment, establishing Hong Kong as a financial center for cryptocurrency in Asia. These spot ETFs are issued by local financial institutions in Hong Kong and are subject to strict regulatory oversight, providing convenient access for both institutional and retail investors to the Bitcoin and Ethereum markets. Compared to traditional cryptocurrency investment methods, spot ETFs avoid the complexities of self-custody while reducing trading risks, bringing more liquidity and confidence to the market.
As of the time of writing, according to SoSoValue data, the total net asset value of Bitcoin spot ETFs in Hong Kong is 217 million USD, accounting for 0.17% of the total Bitcoin market value. The total net asset value of Ethereum spot ETFs in Hong Kong is 34.96 million USD, accounting for 0.12% of the total Ethereum market value.
3. Yao Qian was expelled for engaging in power-for-money transactions involving virtual currency link
On November 20, Yao Qian, former director of the Technology Supervision Department of the China Securities Regulatory Commission and former director of the Information Center, was expelled from the Party and public office due to serious violations of discipline and law, and was transferred to judicial authorities for handling. According to disclosures from the Central Commission for Discipline Inspection and the National Supervisory Commission, Yao Qian abused his regulatory power for personal gain, engaged in power-for-money transactions using virtual currencies, and was involved in multiple violations of integrity discipline and policy regulations. As one of the pioneers of China's central bank digital currency, Yao Qian actively participated in research and outreach in the field of financial technology and cryptocurrency during his tenure. Currently, Yao Qian has been transferred by the Shantou Municipal Supervisory Commission in Guangdong Province to the procuratorial authority for legal review and prosecution, and the involved property has also been transferred.
Yao Qian is one of the pioneers of China's central bank digital currency and a rare institutional official in China who has long promoted cryptocurrency knowledge.
On April 8, Yao Qian published an article in Caixin discussing the Bitcoin spot ETF approved by the US, stating that the market expects the price of Bitcoin to continue to rise. He reviewed the opinions of supporters and opponents of Bitcoin and introduced the regulatory measures for cryptocurrencies in the US, including strengthening the regulation of market manipulation, anti-money laundering, and exchange regulation.
4. Former Deputy Minister of Finance calls for strengthening cryptocurrency research link
The Tsinghua Wudaokou Chief Economist Forum 2024 was held in Beijing on September 28. Former Deputy Minister of Finance Zhu Guangyao attended and gave a speech. Zhu Guangyao called for attention to the research on the development of cryptocurrencies, stating, "It does have negative effects, and we must fully recognize its risks and harms to the capital market. However, we must study the latest changes and policy adjustments internationally, as it is a crucial aspect of the development of the digital economy." Zhu Guangyao reviewed the development of cryptocurrencies, noting that for over a decade, the US has believed that cryptocurrencies have a significant destructive power concerning international anti-money laundering and anti-terrorism financing. Additionally, the drastic fluctuations in cryptocurrency values have had a huge impact on the international financial market. However, this year, there has been a significant evolution in US policy. Zhu Guangyao mentioned that Trump's campaign platform explicitly included cryptocurrencies, and he publicly stated, "We must embrace cryptocurrencies; otherwise, China will replace us." The US Securities and Exchange Commission has also approved the listing of 11 Bitcoin ETFs on the stock and futures markets. In emerging market countries and BRICS nations, Russia, South Africa, Brazil, and India have also taken actions.
5. The central bank issued the (China Financial Stability Report 2024) link
At the end of the year, the People's Bank of China released the (China Financial Stability Report 2024), which extensively mentions the global regulatory dynamics of cryptocurrencies and emphasizes Hong Kong's compliance progress in cryptocurrency.
The report lists the implementation measures of various global entities regarding the regulation of cryptocurrency assets, such as:
The EU has approved the (Cryptocurrency Market Regulation Act), establishing the world's first comprehensive and clear regulatory framework for virtual assets, which is scheduled to be officially implemented by the end of 2024;
The UK is accelerating the legislative process for virtual assets, issuing the (Financial Services and Markets Bill), which includes cryptocurrencies in its regulatory scope.
Singapore has released the (Stablecoin Regulatory Framework), clarifying the scope of regulated stablecoins and the conditions for issuers;
Japan has formulated the (Stablecoin Issuance Act), limiting the issuers of stablecoins to licensed banks, registered transfer agents, and trust companies.
Hong Kong is actively exploring the management of cryptocurrency licenses. Hong Kong will regulate virtual assets by dividing them into two categories: securitized financial assets and non-securitized financial assets, implementing a distinctive 'dual license' system for virtual asset trading platform operators. 'Securities-type tokens' will be subject to regulation and licensing under the (Securities and Futures Ordinance), while 'non-securities-type tokens' will be subject to regulation and licensing under the (Anti-Money Laundering Ordinance). Institutions engaged in virtual asset business must apply for registration licenses from relevant regulatory authorities before operating. At the same time, it is required that large financial institutions such as HSBC and Standard Chartered include cryptocurrency exchanges in their regular customer monitoring scope.
In addition, the macroprudential management section also mentioned: In recent years, cryptocurrency activities have become increasingly complex, and the market has experienced significant volatility. Overall, the correlation between cryptocurrency activities and systemically important financial institutions, core financial markets, and market infrastructure is limited. However, as the application scenarios for cryptocurrencies increase in payments and retail investments, cryptocurrencies may pose risks in some economies.
6. Cryptocurrency fund advertisements appeared on the homepage of Alipay link
In December, a large number of mainland Chinese users received promotional advertisements for cryptocurrency funds on the homepage of Alipay, stating 'Global investment, cryptocurrency surge, invest from 10 yuan, get on board immediately.' Clicking reveals that the fund is Hua Bao Overseas Technology C (QDII-FOF-LOF), a compliant investment model for overseas assets, investing in ETFs managed by ARK Invest, with the top holdings being Coinbase stock and Ark Bitcoin spot ETF. Currently, each person is limited to purchasing 1,000 yuan per day.
Lawyer Huo Yijie wrote that Alipay's related cryptocurrency advertisements do not represent a relaxation of China's control over the cryptocurrency sector; QDII + FOF meets the needs of domestic funds for compliant overseas investment. The State Administration of Foreign Exchange will be responsible for allocating investment quotas, and the proportion of funds flowing into the cryptocurrency market is not large. The fund only invests a small proportion of its funds in cryptocurrencies but heavily promotes it with the hype of "cryptocurrency surging," which may involve illegal false advertising.
The official X account of Alipay posted a message with a picture of Sun Yuchen and a banana, seemingly suggesting that Alipay's cryptocurrency advertisement does not mean that you can purchase cryptocurrency: "Fake news. Seeing banana ads on X doesn’t mean you can buy the banana from X."
The promotional page indicates that cryptocurrency is a type of digital currency based on blockchain technology, with Bitcoin being the most famous cryptocurrency. However, there are currently thousands of different cryptocurrencies on the market, each with its unique functions and uses. The characteristics of cryptocurrencies include decentralization, high security, and anonymity. Historically, once the interest rate cut cycle officially starts, long-term assets may perform relatively well. For example, companies focusing on disruptive innovations such as cryptocurrencies, space exploration, and genetic innovation are sensitive to interest rates and may benefit during periods of declining rates.
7. GCL-Poly Energy collaborates with Ant Group to complete 200 million yuan RWA link
Green energy service provider GCL-Poly Energy teamed up with Ant Group to successfully complete a RWA based on photovoltaic physical assets, involving an amount exceeding 200 million yuan. The press release stated that this is the first domestic RWA for photovoltaic physical assets, helping domestic green assets connect efficiently with overseas funds, achieving digital technology empowerment for the real economy.
8. Post-00s college student sentenced to 4 years for fraud after withdrawing liquidity from dogecoin link
"Post-00s" college student Yang Qichao issued "Dogecoin" BFF on BNBChain and was sentenced to 4 years and 6 months for fraud due to withdrawing liquidity, causing losses of 50,000 USDT to others. One of the buyers, Luo, found Yang Qichao through a mutual WeChat friend and requested a refund for his losses, which was refused. On May 3, 2022, Luo reported to the police, claiming he lost over 300,000 yuan (converted from 50,000 USDT). Shortly after, the police filed a criminal case for fraud and arrested Yang Qichao in November of that year in Hangzhou, Zhejiang.
9. Judicial interpretation of money laundering criminal cases in China includes virtual assets link
The Supreme People's Court and the Supreme People's Procuratorate jointly held a press conference to release the (Interpretation on Legal Issues Regarding the Handling of Money Laundering Criminal Cases) (hereinafter referred to as the (Interpretation)). The (Interpretation) will take effect from August 20, 2024.
It was mentioned that the (Interpretation) will classify transactions involving 'virtual assets' as one of the methods of money laundering. It clearly states that transferring or converting criminal proceeds and their benefits through 'virtual asset' transactions or financial asset exchanges can be recognized as the act of concealing or disguising the source and nature of criminal proceeds as stated in the first paragraph, item five of Article 191 of the Criminal Law.
"This is the first time the 'two high' authorities have classified virtual asset trading as a method of money laundering, and the expression of virtual asset trading also appears for the first time in judicial interpretations," said Liu Yang, a partner at Beijing Deheng Law Firm, to a reporter from (China Times).
10. Zhang Yufeng's senior from Shenzhen University publicly exposes the details of his fraud link
Zhang Yufeng has been referred to by the media as 'Little Ma Huateng,' and several authoritative media outlets reported that he donated 50 million yuan to Shenzhen University just one year after graduation. However, it was later revealed that many of his credentials were fabricated, and he actually did not make any donations, did not graduate normally, defaulted on online loans, and even forged an identity as an FTX employee.
But even more surprisingly, after gaining the trust of alumni through fraudulent donations, Zhang Yufeng frequently asked acquaintances for money under the guise of investing in 'projects' over the past year, failing to return the money on time once the specified period expired, leading multiple victims to report to the police. To prevent more people from being deceived, Huang Yifeng, a senior from Shenzhen University, decided to stand up and publicly expose this 'professional scammer.'
Huang Yifeng said that Zhang Yufeng claimed to have some cryptocurrency projects that could double in a few months. After friends invested and the investment period expired, Zhang Yufeng began to default and came up with many absurd excuses, such as being hospitalized in Hong Kong. After multiple victims reported to the police, Zhang Yufeng's parents, who ran a printing factory in Dongguan, helped repay part of the debt. Zhang Yufeng's rental unit at Shenzhen Bay No. 1 was warned for unpaid rent. Zhang Yufeng even defaulted on a 6000 yuan online loan.
