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Chinese version of regulating virtual currencies

Posted January. 18, 2018 10:02,   

Updated January. 18, 2018 10:25


The market price of bitcoin, a virtual currency, plunged by 28 percent in a single day on Wednesday. South Korea is filled with the roar of small investors as the market price of the virtual currency dropped by more than half compared to when it hit its record high. “The Chinese government is going to shut down the P2P site for virtual currency and mobile application,” reported Bloomberg on Monday. Ever since then, the market price of virtual currencies has been nosediving. Korean Deputy Prime Minister Kim Dong-yeon’s statement “closing down the stock exchange is still an option” on Tuesday also influenced the market price.

China has been building a stable start up ecosystem in a short period of time by lifting restrictions for new businesses. The drone industry, which South Korea recently announced to promote, is already a sector dominated by China in the global market. Didi Chuxing, of which the enterprise value is worth more than 59 trillion won, is a car sharing service that South Korea cannot even start. The principle of China’s policy is “post-regulation,” which means that it will allow new businesses and start regulating after a problem occurs.

However, if the Chinese government identifies it as an obstacle to maintaining its regime, it exercises unsparing control. A case in point is “The Great Firewall,” which is a program that blocks certain foreign websites and social networking services. The justification of it is “blocking harmful sites” but the reality is censoring the Internet to block any issue that may threat the regime on the Internet. Recently, a businessman, who sold a program that avoids this firewall, was sentenced to five years and six months of imprisonment. Among the “Internet freedom map” announced by an American human rights organization called Freedom House in 2016, China ranked the lowest among the 65 countries subject to the research.

This is similar to China’s decision to abolish the exchange market of virtual currencies last September. The Chinese government regarded it as a challenge against the government’s currency policy and taxation rights, and prohibition of sending Chinese yuan abroad. As Chinese investors continued to make transactions on P2P site, China took out yet another hyper-intensive regulation measures. Although there were disputes over the future of virtual currencies, experts agree that it is worth noticing that there is high possibility of using block chain, which is a technology based on encryption. Deputy Prime Minister Kim reconfirmed his commitment towards regulation by saying on Wednesday, saying, “Virtual currencies differ from block chain.” Rather than absorbing virtual currencies into the system to foster innovation, he set forth regulation measures. Instead of learning from the “Chinese style regulatory reform,” Kim seems to have picked up “Chinese style regulation."