Yin Zhentao is the deputy director of the Law and Finance Research Office of the Institute of Finance of the Chinese Academy of Social Sciences, and concurrently the Secretary General of the Financial Law and Financial Supervision Research Base of the Chinese Academy of Social Sciences. His main research areas include financial regulation, financial crisis and financial history. This time, Yin Zhentao talked about the progress of the national legal currency from the perspective of supervision, the impact of the current encrypted digital currency on the financial system and the future ICO regulatory trends.
Babbitt: The People's Bank of China officially disclosed that it has started research and development of legal digital currency. What is the study of the national legal digital currency? What are the alternative functions of the legal digital currency for traditional currencies? What impact will it have on the current financial system?
Yin Zhentao: The People's Bank of China has always had a very positive attitude towards the legal digital currency. I think there are several points. Everyone knows that the digital currency research institute established by Director Yao Qian is two years away. Judging from the official public information at the current stage, it is still at the research level, mainly to study the issuance mechanism of legal digital currency, including the form of issuance, technical requirements, distribution environment, and of course, between the legal digital currency and the current currency. The impact and so on, all have to do some comprehensive evaluation and research and development in order to truly land.
Speaking of the replacement of the legal digital currency against the traditional currency, I think this is also the reason for issuing the legal digital currency. In two aspects, the first aspect, with the development of traditional finance and technology, the traditional currency, including what we call banknotes And electronic money is indeed subject to some restrictions in terms of payment and global circulation. On the other hand, our current international monetary system is a dollar-dominated monetary system. It is indeed a regional issue endorsed by a country. In the current new situation, it has a certain influence and negative effect on global trade and currency.
Therefore, I think that the currency in the digital form is a trend. It is also a big trend to adapt to the current reform of the International Monetary Fund or the international monetary system, as well as to the development of the market and to provide more convenient means of payment for everyone.
Babbitt: What is the impact on the current digital currency order after predicting the digital currency that the central bank issued the national credit endorsement? What improvements in technology and security will be compared to current digital currencies?
Yin Zhentao: When it comes to the relationship and influence between legal digital currency and existing digital currency, I think it does not matter. It is completely two systems, two technologies, and two markets.
The state issues legal digital currency, first, the state endorsement, and second, its technology, in fact, is not necessarily entirely blockchain technology. Its market and environment are also different. One can also directly exchange and trade with French currency. The other one, the digital money market we are talking about now does not have such a function. Then, from the technical and security aspects, it certainly does not. Similarly, because of the investment in infrastructure, the support of the statutory environment, the support of the legal environment, and other inputs, it is not a tier-level.
I think that in terms of impact, there is actually no competitive relationship between them. One possibility is that this illegal digital currency disappears, but I think this possibility does not exist. It is actually two paths. In both markets, each plays its own role and role.
The legal digital currency is definitely a relationship with banknotes, which is a common currency. The digital currency is the current digital currency or virtual currency. It is a specific area, a specific channel, and a specific group of people. A digital asset, or a digital trading medium, nothing more.
Babbitt: What impact does the decentralized encrypted digital currency, such as Bitcoin Ethereum, rely on blockchain technology on the current financial system? What are the risks and problems in the field of financial applications, and what are the positive effects on the other hand?
Yin Zhentao: From the current point of view, because it can not be completely exchanged with the French currency, at the same time, its trading or use of the scene is still relatively small. Although it has little direct impact on the financial system, it indirectly causes a lot of financial risks. Everyone knows that there are more chaos around virtual currency, such as air coins, pyramid money, and so on. These are the illegal fund-raising, financial fraud is a lot, I think these risks are the biggest.
If the positive impact is because the current blockchain application is relatively successful, or the scale of such as bitcoin, etc., attracts a large number of people at the same time, then this focus on technology may develop the blockchain technology itself. Certain help.
Babbitt: What do you think about the token mechanism of many blockchain projects? Some people say that there is no token and no blockchain. Do you agree?
Yin Zhentao: If the token is placed in the currency circle, it may be the currency. It is called the token when it is placed in the chain. I think the difference is not big. I think that the blockchain technology has a token, which is a kind of credit label or logo. If there is no token, it is not a blockchain. I think there is such a dispute now, but I don't agree with it.
Because the core of the token is an incentive mechanism, there is an incentive mechanism for everyone to operate on the closed loop or the chain of the blockchain, but the incentive mechanism can have many ways and methods, not necessarily all tokens or currency.
I think that many people's views are different, but I still have a view that the current blockchain technology does not mean perfect, nor does it mean that the blockchain technology after one year is the same as it is now. I think this change will be great.
We have seen the emergence of Internet thinking from the emergence of the last phenomenal level. It has gone through forty or fifty years, and it has changed a lot in this process. The blockchain has only developed in less than ten years. I think there may be in the process. a big change.
Babbitt: From a technical point of view, it is difficult to achieve a total ban on digital currency. Although there are some shortcomings in the encrypted digital currency, it will bring some financial risks, but it also has value experiments. Do you think there is any exploration in super-sovereign currency? the value of?
Yin Zhentao: If it is a super-sovereign currency, it is still a legal currency. No matter what kind of super-sovereign currency, whether it is regional or global, there must be support from the central bank behind it, whether it is a central bank or a number of central banks. We say that decentralized bitcoin to achieve super-sovereign currency is currently impossible to achieve.
Babbitt: We know that after 9.4, China is a one-size-fits-all ICO, closing domestic exchanges, restricting the payment channels for purchases, etc. Is there any possibility of over-regulation of this regulatory trend? Still gradually relaxed?
Yin Zhentao: Regarding whether this supervision is overweight or relaxed, my suggestion is to further increase the code. Because we see that the current situation is not obvious, whether it is a one-size-fits-all or closed exchange, restricting payment channels, etc., the real effect is not obvious, many continue to fight the ball, many ICO There are also variants, many of which are registered overseas. Judging from the market situation, I feel that the effect of supervision is not obvious. I think it should be further coded.
Babbitt: How is the domestic ICO now qualitative? The US SEC regulates digital currency as a security, including ICO and token sales. In terms of regulation, does China have something to learn from, and what trends will be developed in the future?
Yin Zhentao: How ICO is very clear in definition. At present, ICO is an illegal fundraising in China. Then the United States does regulate it according to securities. This is the definition of digital currency is different. The way of supervision is different. .
From the current situation, the United States is designed and regulated in accordance with the system of securities law, and our securities law and currency transactions are actually not very matched, so we are unlikely to use the securities law to regulate ICO.
If you ask the trend, I think that in the future, our qualitative determination of ICO must first be an illegal fund-raising. It is completely cut off, but we may have some clearer definition of the regulation of virtual currency, so we must clarify it. It is an asset. Because the United States defines it as a kind of security, we may locate it as an asset, not a currency. If it is an asset, everyone knows that it is a virtual asset like qq, so one of my judgments, like bitcoin. Waiting for this type of asset may move in this direction.
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