On The Financial Supervision Of Virtual Currency

In 2009,Satoshi Nakamoto released the Bitcoin Protocol,which means the birth of Bitcoin which is a creative virtual currency.Since then,virtual currency has gradually come to the public’s view and is considered as a new force that can reform the current monetary system.However,because of its anonymity,"decentralization" and other characteristics,virtual currency facilitates illegal criminal activities such as money laundering,and poses a certain threat to the national currency sovereignty.The virtual currency trading market also has a high risk of speculation,which brings many challenges to financial supervision.The mainland of China adopts a strict supervision attitude of comprehensively prohibiting virtual currency,and distinguishes virtual currency from blockchain technology,private currency from legal currency.The government has prohibited virtual currency,while encourages the development of blockchain and legal digital currency,which is a supervision strategy that consistent with the internal and external environment of China.However,compared with the flexible and effective supervision mechanism formed in USA,the financial supervision of virtual currency in China is not systematic enough.There are many problems need to be solved: The relevant provisions are vague and there is lack of superior law regulation in China.The supervision responsibility of virtual currency is vague and there is no special supervision department,which may lead to regulatory loopholes.The technology of the supervision is not advanced enough to cracked down on money laundering and other illegal crimes.Inspired by overseas regulatory experience,this paper believes that the financial supervision should always pursue the balance between the value of financial innovation and the value of reducing financial risks in the regulation of financial innovation products.While maintaining economic stability through effective regulation,we should also consider making China take advantage of relevant international economic and technological competition by promoting the financial innovation.Therefore,the financial supervision of virtual currency should adopt a short-term and long-term strategy.In the short term,the advices of the measures are as follows: First,define the attributes of virtual currency and fill the vacancy of the upper law.Second,set up a special department in the financial supervision institution to supervise the virtual currency.Third,improve the supervision technology of anti-money laundering and combating other illegal crimes.In the long term,the government should always pay attention to the financial supervision trend of different countries and regions on virtual currency,and respond to the new situation and development of virtual currency in a timely manner in combination with conditions the China,so as to adjust financial supervision strategy.In the future,if virtual currency transactions are allowed in China,the government should establish the normative industry standards.