Cover image source | Pixabay
Source | China Social Sciences Net-China Social Sciences News
Author | He Caihong Chen Jianqi
In recent years, digital economic innovations such as digital currency have received widespread attention from countries around the world. Countries have different views on digital currencies. Some countries are actively promoting digital currency innovation, but some countries are taking a wait-and-see attitude towards digital currencies. In-depth analysis of the digital currency concept and related policies of developed countries will help understand the development trend of digital currency and deepen international financial cooperation.
Pay attention to strengthening private digital currency supervision
Digital currency is a new currency form developed by the integration of cryptography technology and Internet technology, and its impact on the economy and society has greater uncertainty. In particular, blockchain technology has the characteristics of decentralization and distribution, which may lead to the development of digital currency based on it that may be used for illegal activities such as money laundering. Therefore, some developed countries not only pay attention to the new opportunities brought by digital currency, but also pay close attention to the potential challenges that private digital currency may cause, and pay attention to the supervision of private digital currency transactions.
The U.S. federal government does not specifically restrict private digital currency transactions, but uses the existing regulatory system to control it, including securities regulation, anti-money laundering regulation, and tax regulation. In terms of securities supervision, according to the US Securities Act, private digital currency belongs to the category of securities. Once its issuance or resale is deemed to be a securities sale, it may be regulated by the US Securities and Exchange Commission (SEC), the US Securities and Exchange Commission and the courts. The judgment will be based on the nature of the transaction rather than the form. Since 2017, the U.S. Securities and Exchange Commission has mainly supervised the digital currency industry through declarations, prosecutions, and investigations. It believes that most of the token financing activities of projects are the issuance of securities, and relevant business formats must be registered. Since July 2019, the US Securities and Exchange Commission has exempted some projects from listing registration, and has also issued inaction letters for some projects. In terms of anti-money laundering, the United States mainly supervises the digital currency industry in accordance with the Bank Secrecy Act, but this type of supervision is not aimed at all entities involved in virtual currency transactions. Only entities engaged in currency service businesses need to meet the Bank Secrecy Act. Compliance requirements for anti-money laundering. In terms of tax regulation, in March 2014, the U.S. Internal Revenue Service issued guidelines on virtual currencies, clarifying that the sale, exchange or use of convertible virtual currencies may lead to tax consequences.
The Japanese government has clearly included digital currency in the category of virtual currency for supervision. Japan amended the "Payment Service Law", requiring those who provide virtual currency transaction services to complete the registration with the Financial Services Agency and establish an internal control system, record keeping system and suspicious transaction reporting system similar to other financial institutions, otherwise they may face administrative Punishment or criminal prosecution. At the same time, in accordance with the provisions of Japan’s Law on the Prevention of the Transfer of Criminal Proceeds, “virtual currency transaction service providers” are obliged to verify the identity data of customers and those who have substantial control over the customer’s business, and maintain verification records and transaction records for 7 years , To report suspicious transactions to relevant authorities. The above regulations are similar in substance to the anti-money laundering regulatory requirements for banks and other financial institutions, indicating that virtual currency trading institutions that handle fund transfer businesses also need to perform anti-money laundering regulatory obligations.
Competition and cooperation in the field of legal digital currency
In 2019, the Bank for International Settlements and the Payment and Market Infrastructure Committee investigated the research and development of legal digital currencies in 66 countries, and the results showed that 80% of countries are actively studying legal digital currencies. In June 2019, after the US Internet company Facebook released a white paper on Libra, the research and development of legal digital currencies in some developed countries has accelerated.
Digital currency competition in developed countries is becoming increasingly fierce. The Bank of Canada disclosed in June 2019 that it is designing a digital currency system that can be used by people who do not have a bank account or mobile phone and can work when power is off. The security is similar to that of paper money, in order to obtain people who prefer to hold cash. Public trust. The Bank of Japan issued a research report entitled "Technical Issues of Central Bank Digital Currency with the Same Functions as Cash" in July 2019, proposing that legal digital currencies should have the same functions as cash. At the meeting of finance ministers and central bank governors of the Group of Twenty (G20) held in February 2020, Sara John, chief financial officer of the Bank of England, stated that it is important for central banks to increase their research on sovereign cryptocurrencies, otherwise they will not be able to Strike a balance with the private sector. In March 2020, the Banking, Housing and Urban Affairs Committee of the US Senate announced a draft bill on accelerating the introduction of digital dollars. Also in March 2020, the Bank of France announced that it would speed up the testing process of legal digital currencies to promote the development of digital euros. European Central Bank President Lagarde also emphasized that the feasibility study of the digital euro must be accelerated.
Relevant developed countries not only pay attention to competition in the field of legal digital currency, but also value cooperation in this area. In February 2020, the central banks of six countries including the United Kingdom, Switzerland, and Canada announced that they would discuss digital currency cooperation in Washington. The central banks of Canada, the United Kingdom, Japan, the European Union, Sweden, and Switzerland and the Bank for International Settlements have established a group to jointly study digital cryptocurrency related issues and share their experiences. In July 2020, the Group of Seven countries decided to cooperate on the issuance of legal digital currency. In October 2020, the Bank for International Settlements, in collaboration with the Federal Reserve, the European Central Bank, the Bank of England, the Swiss National Bank, the German Central Bank, the Bank of Japan, and the Bank of Australia, published a report entitled "Central Bank Digital Currency: Basic Principles and Core Features". The basic principles and key features of a universal legal digital currency are emphasized, while digital technologies are better developed, in order to improve and achieve the overall goals of social policies, central banks of various countries have been actively carrying out scientific research in order to show the public the benefits of digital currencies. Pros and cons.
Digital currency policy design in developed countries
Considering that private digital currencies are difficult to supervise and are prone to illegal transactions, which may affect the normal operation of the economy and society, developed countries generally maintain a cautious attitude towards private digital currencies and do not actively support the development of private digital currencies. Correspondingly, some developed countries have a positive attitude towards legal digital currencies as a whole, continue to explore relevant policy measures, innovate the issuance and liquidation models of legal digital currencies, and promote healthy competition and cooperation in the field of legal digital currencies. The game between private digital currency and legal digital currency has become an important aspect of digital currency policy formulation in developed countries.
The United States has not yet issued a digital dollar, and the private digital currency "Libra" has become an important content of policy-making debates. Fed Chairman Powell once stated that since the existing dollar system as the "heart" of the financial system still functions well, the Fed does not promise to eventually issue a digital dollar. But in February 2020, he stated at the US Congressional Financial Services Committee hearing that “digital dollars may win the issue of privacy protection”. Fed Governor Brainard also stated in a speech at the Stanford University Business School that the Fed is conducting research and experiments on potential use cases of distributed accounting technology and digital currencies, including analysis and determination of the potential for the development of legal digital currencies.
The European Union does not have specific regulations on digital currencies, but some EU member states have begun to experiment in this regard, including France. The Bank of France is not only concerned about the issuance of legal digital currency, but has also begun to explore the design of related settlement mechanisms. In December 2019, the President of the Bank of France revealed that France's fiat digital currency experiment will focus on multiple aspects, including the development and issuance of fiat digital currency, potential technical challenges, and the impact of legal digital currency on traditional economic fields. The Bank of France has been calling for experiments on the use of the digital euro, with the aim of exploring the use of legal digital currencies for clearing and settlement. Although previously called for the use of a blockchain-based settlement system in Europe, the Bank of France stated that its latest legal digital currency experiment plan does not require the use of any specific technology. The experimental plan is divided into three phases, namely designing digital currency, analyzing its impact, and finally executing operations. In addition, the project will also study the potential impact of legal digital currencies on market infrastructure, monetary policy, macroeconomic factors, and legal and regulatory frameworks.
Although relevant countries have been exploring the field of digital currencies for many years, countries have not yet reached a consensus on the advantages and disadvantages of private digital currencies and legal digital currencies. Some developed countries have focused on private digital currencies in policy design, while others have focused on them. Develop legal digital currency. In the field of digital currency, there is not only competition between legal digital currency and private digital currency, but also competition within legal digital currency and private digital currency. No matter how the future digital currency will develop, we need to take a cautious and serious attitude to conduct more experiments and research.