Terrorism financing under virtual currency

1. Germany
at the end of June 2013, after the German parliament decided that bitcoin would be tax-free if it was held for more than one year, bitcoin was recognized as a "unit of account" by the German Ministry of finance, which means that bitcoin has been regarded as a legal currency in Germany and can be used to pay taxes and engage in trade activities< In August 2013, judge Amos mazant of Texas District Court ruled in a case of bitcoin virtual hedge fund that bitcoin is a kind of currency and should be included in the scope of financial regulation
legal status
bitcoin can still be considered as legal at present. In the world, bitcoin can be regarded as a virtual commodity and protected by law; If bitcoin cannot be officially recognized as a kind of currency by law, it may bring inconvenience to the businesses and indivials who accept bitcoin in tax declaration, because the businesses who accept bitcoin will be regarded as barter transactions, and such transactions are more troublesome than ordinary transactions in tax declaration
at the same time, bitcoin, as a commodity highly similar to currency, needs to meet the demand of anti money laundering. Bitcoin needs to be included in the personal property declaration, banking anti money laundering system, anti insider trading, anti market manipulation and other systems in terms of transaction and possession. Bitcoin exchanges and storage institutions may also need government supervision and licensing. Some fast-growing bitcoin exchanges and payment service providers are actively exploring cooperation with regulatory agencies to bring bitcoin payment into the regulatory framework of anti money laundering and anti-terrorism financing by applying for licenses and actively communicating with regulatory authorities
in Europe, the European Central Bank published a report on "virtual currency architecture", and the French bitcoin trading platform obtained the PSP qualification. On December 6, 2012, the central bank wrote in the report: "this report is the first attempt to provide a basis for discussing the virtual currency system. While these systems may play an active role in financial innovation and in providing consumers with alternative means of payment, they also clearly create risks. " "Because of the small size of virtual currency systems, these risks do not affect anyone other than the users of these systems," the report added The report reviews the history of bitcoin and reviews its basic features, including currency and technical operation.

2. Reason: with the rapid development of information technology, real money is far from meeting people's demand for capital flow. If there are enough people to recognize the value of a virtual currency, it may become a substitute unit of material exchange, and the existence of virtual currency will inevitably cause another upsurge in the financial sector
in view of the possible risks of virtual currency, many international organizations and central banks have responded publicly to the supervision of virtual currency system. These responses can be roughly divided into four categories: warning and risk warning, supervision and registration permission, legislative norms, and explicit prohibition
(1) warning and risk warning
some central banks and regulators have issued risk warnings against the special currency and virtual currency system. The federal financial regulatory authority of Germany, the Bank of France, the central banks of the Netherlands and Belgium have issued public warnings against the possible money laundering and terrorist financing caused by the use of bitcoin. In the report released at the end of 2013, the European Banking authority (EBA) warned consumers of many risks of virtual currency, such as exchange loss, e-wallet theft, unprotected payment, price fluctuation and so on. Although Spain did not have a similar risk warning, it issued a timely information announcement related to virtual currency
(2) supervision and registration license
generally speaking, international organizations believe that the supervision of virtual currency should find a balance between risk prevention and innovation promotion. Since 2012, Sweden has required transactions related to virtual currency to be registered with financial regulators. Other countries pay attention to qualification supervision, so as to make it indirectly meet the requirements of prudential supervision. In other countries, the regulation mainly focuses on the business model of virtual currency transaction. The financial prudential regulatory authority of France regards the provision of bitcoin circulation and trading services and the act of earning funds in the process as a payment service and requires the authorization of the government. In addition, some countries focus on the intermediary institutions related to virtual currency. The German federal financial regulatory agency and Danish regulators believe that the provision of intermediary services for virtual currency needs to be authorized< (3) legislative norms
at present, some countries have proposed legislation to regulate virtual currency transactions. Canada plans to legislate to allow the government to supervise the transaction of bitcoin, and to include the transaction of more than US $10000 into the scope of suspicious supervision. The United States hopes to adjust the relevant legal structure should be compared with the development of the special currency. In order to make the Bank Secrecy Act (BSA) applicable in the context of network, the financial crime enforcement network (FinCEN) of the U.S. Department of the Treasury issued the explanatory guidance on the behavior and subject definition of private generation, holding, distribution, trading, acceptance and transmission of virtual currency in 2013. The European central bank stressed that it should strengthen international cooperation under the existing legal framework, and regulate virtual currency from the European and global level under the existing legal framework. More countries believe that bitcoin is not a currency in circulation, has no legal status, and does not meet the definition of financial instruments, such as Finland, Sweden, Malaysia and Indonesia
(4) it is forbidden
in some countries, bitcoin related transactions are prohibited. In December 2013, the people's Bank of China banned financial institutions from trading in bitcoin, which was subsequently extended to payment service providers. The central banks of Thailand and Indonesia share the same attitude. The circulation of anonymous internet currency (including bitcoin) is prohibited by the Russian judicial inspection department as a substitute for currency. The Central Bank of Russia has earlier included the provision of bitcoin services in the scope of suspicious transaction monitoring. The U.S. Securities and Exchange Commission (SEC) has banned the issue of unregistered shares in exchange for bitcoin, and unregistered online securities trading activities in virtual currency.

3. The definition of bitcoin in Chinese law:
according to the regulations on the administration of RMB, the proction and sale of token tickets are prohibited. Because there is no clear judicial interpretation of the definition of token ticket, if bitcoin is included in the "token ticket", the legal prospect of bitcoin in China will face uncertainty< On June 4, 2009, the notice of the Ministry of culture and the Ministry of Commerce on strengthening the management of virtual currency in online games (Wen Shi Fa [2009] No. 20) stated that the scope of application of virtual currency in online games was defined for the first time, and a distinction was made between the current virtual currency in online games and the virtual props in games; At the same time, the notice said that the "notice" stipulates that enterprises engaged in related services must be approved before they can operate
in China, some Taobao stores have begun to accept the use of bitcoin, and the number of businesses will graally increase
in October 2013, the first bitcoin quarterly, one bit, was released
on October 15, 2013, the network accelerator service of the network announced its support for bitcoin
on October 26, 2013, btcmini reported that GBL was hacked
on October 31, 2013, Lei Teng, a famous Internet lawyer, proposed the event of "filing a case to investigate the closure of GBL bitcoin trading platform as soon as possible", analyzed the "value function" and "use function" of bitcoin, and bitcoin should be governed by relevant laws.

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5. Private digital currency forces the monetary authorities to study the issue of central bank digital currency. There are not only bitcoin, lightcoin and other digital currencies, but also the domestic currency surplus China has started to issue applied digital currencies
all kinds of private digital currencies represented by bitcoin have sprung up, developed rapidly and exerted great influence. Many economists and financiers in the world, including central bankers, have been greatly impacted, and some even mistakenly believe that private digital currency may replace sovereign currency. As early as the end of 2013, the author clearly pointed out that virtual currency (including private digital currency) is not a currency in essence and cannot replace sovereign currency [3]. With the passage of time, the non monetary nature of virtual currency is graally recognized by people
private digital currency uses a series of new technologies, which have strong penetration into the financial system and even impact on the operation of modern economy and finance. Therefore, in order to maintain the stability of the monetary system and even the whole financial system, the monetary authorities must also use the same or even more advanced technology and design to study the issue of central bank digital currency. If the private digital currency is allowed to develop disorderly, it will have a serious impact on the monetary authorities' policy regulation and the economic and financial system
first, if private digital money is diverted and replaced by some sovereign money, the effectiveness of monetary policy will be weakened and the transmission mechanism will be distorted. Private currency and sovereign currency are in the relationship of one ebb and flow. With the continuous expansion of the scope of use of private digital currency, the use of sovereign currency will graally decline, which will rece the monetary authority's control over sovereign currency. At the same time, the influence of monetary policy regulation on the supply and circulation of sovereign money will decline and become unstable, which will weaken the effectiveness of monetary policy and distort the transmission mechanism. If the private digital currency is widely used but not issued and regulated by the monetary authority, the modern economy will lose an important means of regulation, and the economy will not function normally because it is not regulated by monetary policy< Second, the value of private digital currency fluctuates greatly, which threatens financial stability. Private digital currency is not a real currency without national credit endorsement. Its price is easily affected by market expectations, and its volatility is very high, so it is difficult to guarantee the market liquidity. With the expansion of the scope and scale of private digital currency, the probability of indivial private digital currency risk evolving into systemic risk will also rise< Thirdly, the supply of private digital money is relatively fixed, which is difficult to meet the needs of modern economic development. Taking bitcoin as an example, there is a contradiction between the upper limit of supply set by the system and the expanding social proction and commodity circulation. If it is widely used, it will cause deflation and inhibit economic development. This is also the root cause of the collapse of the gold standard
Fourth, private digital currency lacks a central regulation mechanism, which is difficult to meet the needs of the stability of the modern monetary system. The so-called "decentralization" without centralized issuing and regulating institutions is a common feature of private digital currency. If the private digital currency is generally accepted by the whole society, and the monetary authority is unable to stabilize the currency value through the central adjustment mechanism, it will not only cause economic fluctuations, but also shake the monetary system based on national credit[ 4]
fifthly, private digital currency brings challenges to anti money laundering, anti terrorist financing and capital control. Private digital currency is characterized by anonymity of transaction and free transnational flow of funds, which makes it easy for criminals to cover up the source and investment direction of their funds, and indivials to evade the regulations on the amount of foreign exchange and foreign exchange remittance [5], which brings convenience to money laundering, terrorist financing and capital control evasion< Sixth, private digital currency increases the difficulty of consumer protection. The price of private digital currency fluctuates greatly, market participants are almost not regulated, the security of users' funds is not guaranteed, and the transaction is not transparent. Therefore, private digital currency transactions are prone to fraud, theft and fraud. This not only causes the lack of protection of consumers' rights and interests, but also increases the difficulty of evidence collection and investigation by the regulatory authorities[ 6]
therefore, in order to deal with the impact of the rapid development of private digital currency on monetary sovereignty, monetary policy, financial risk and consumer protection, the monetary authorities clearly realize that the state should start to study the issue of central bank digital currency as soon as possible. In the future, with the support of national credit, the digital currency of the central bank should continuously meet the requirements of the society for the use of money technology and become a widely recognized settlement and payment method. Only in this way can the monetary authorities expand the use of sovereign currency and rece the impact of private digital currency on the monetary system and the entire financial system Transferred from NetEase Finance)

6.

the MSB (money service provider) license is issued by the financial crime enforcement agency (FinCEN) of the US Treasury Department

the U.S. Treasury and CSRC have clearly emphasized that the virtual currency exchange and its manager are MSB, which are regulated by the Bank Secrecy Act (BSA) and must be registered as MSB in FinCEN, that is, they must be licensed and comply with the anti money laundering and anti terrorist financing regulations

At the same time, FinCEN also said that if the structure of the ICO involves the issue or sale of securities or derivatives, some participants in the ICO may be under the jurisdiction of the SEC or CFTC. In this case, the anti money laundering and anti terrorist financing requirements under the SEC or CFTC regulations apply to these ICO participants

campbx, a bitcoin leveraged trading platform in the United States, announced the acquisition of MSB license, officially stepping into the compliance threshold. Therefore, the acquisition of the MSB license by the United States also means that it can carry out currency transactions in the United States

the advantages and functions of MSB license:

investor recognition

the corporate law and financial instry supervision in the United States are very perfect. With the U.S. license, your digital currency trading platform will be more recognized by global investors

get authoritative approval

get authoritative approval from the U.S. Treasury Department, you can carry out relevant business in the United States and around the world, that is, on behalf of the compliance supervision of digital currency platform

become a first-line platform

MSB license is also a standard license for global digital currency trading institutions. Platforms such as coinbase, bitfinex, poloniex and hotcoin.com all hold this license to operate

diversified services

MSB license allows currency exchange and delivery services, so that you can better meet customer needs and provide more diversified services

"a small step for coinbase and fire money, a big step for digital money." It can be said that this epic good provides a strong foundation for BTC's strong rise in this round

It has to be said that the birth of the first license of MSB digital currency in the United States has also made a good start for the exchange. Next, exchanges in the United States should get more and more licenses, and the trading of digital currency will graally become legal and standardized. It can even be predicted that other countries will also rise this wave to make trade and investment truly borderless, and the inherent characteristics will make finance itself more simple and convenient

7. The overall regulatory level in Australia is more open-minded in the regulation of the issuance and trading of digital currency. The investment market has a wide acceptance of ICO, and investors are enthusiastic. The income of digital currency exchange is considerable and prosperous. So far, the digital currency exchange has been formally incorporated into the jurisdiction of Australian law, and it must also comply with the same obligations of other financial institutions, such as banks, including performing a comprehensive reporting obligation to Australia's trade reporting and Analysis Center (i.e. anti Xi money institutions), formulating and providing effective information, It has a series of legal documents and control proceres for anti Xi money and anti terrorist financing based on risk control to obtain government approval and allow it to operate digital currency exchange

here is a brief introction to the current regulatory framework of digital currency in Australia from the perspectives of digital currency definition, digital currency issuance and exchange:

I On the legal definition of digital currency

Australia added the definition of digital currency in the anti Xi money and Anti Terrorism Financing Act amended in 2017: digital currency is the representative of value in digital form; A unit that can act as an intermediary of exchange, a store of value, or an account; Issued by institutions other than the government; It can be exchanged with legal currency and used as consideration for goods or services; It is available to the general public without any restrictions on its use; Or other transaction means, digital proceres or credit means as stipulated in the anti money / anti terrorist financing laws.; Or other means of transaction, digital proceres or credit as stipulated in anti money / anti terrorist financing laws< Secondly, the regulation of digital currency issuance in Australia is mainly to determine whether a certain type of digital currency is a financial proct. If it is a financial proct, it should be regulated according to the relevant provisions of financial procts. If it is not a financial proct, it should be regulated according to the relevant provisions of financial procts, It should be regulated in accordance with the relevant provisions on consumer protection (Australian consumer law) and general legal provisions

of course, no matter whether a certain type of digital currency is a financial proct or not, there should be no misleading or deceptive behaviors in the process of its issuance, including: using social media to expand public attention and interest in ICO; Engage in or arrange specific people to trade virtual currency or virtual assets with specific strategies, so as to generate larger trading volume on the surface; The issuance information is not fully disclosed; Or for the ICO that has not obtained the approval from the regulatory department, publicize that it has obtained the approval from the regulatory department< According to Australian law, if digital currency constitutes one of the following types of financial procts, the regulatory framework of financial procts is applicable:

1, investment management plan

2, stocks

3, derivatives

4, non cash payment facilities

3 Digital currency trading platform

(1) all trading platforms involving the exchange between legal currency and virtual currency should be registered with austrac and subject to supervision

according to austrac's guidelines, from the perspective of anti Xi money / anti-terrorism financing supervision, all trading platforms involving the exchange between legal currency and virtual currency should be subject to supervision, It includes:

1. Register with austrac

2. Adopt and maintain AML / CTF system

3. Report suspicious transactions and large transactions to austrac

4. Record and save user information, transaction information and the implementation of AML / CTF system

(2) all trading platforms of trading financial procts should obtain licenses

according to statistics, Although the number of licensed exchanges in Australia is relatively small, the quality is relatively high, and most of them are small and medium-sized, and the types of transactions are mainly spot transactions. Moreover, the current Australian exchange license is strictly regulated by ASIC and other departments. It can be seen that while Australia is striving to protect the financial order and investors' rights and interests, It will also give the development of digital currency a bright future, and the development of digital currency in Australia will be unstoppable.