Why do we prohibit virtual currencies?

1. Financial stability and risk control:

The high volatility and instability of the virtual currency market may pose risks to the stability of financial markets. The government is concerned that significant price fluctuations in virtual currencies could lead to speculative activities and market chaos, potentially triggering systemic risks.

2. Prevention of financial crimes:

The anonymity and decentralized nature of virtual currency transactions make them potential channels for money laundering, illegal fund flows, and other financial criminal activities. To curb these illegal activities, the government has implemented measures to prohibit or restrict virtual currency trading.

3. Capital outflow control:

Virtual currencies can serve as a means for capital outflows, especially for a country like ours that enforces strict capital controls. Virtual currency trading may bypass traditional foreign exchange controls and affect capital flows. To strengthen capital control, the government has limited virtual currency trading.

4. Outdated regulatory technology:

The rapid development of virtual currency technology presents significant technical complexity and regulatory challenges. The government may believe that more time and resources are needed to understand, regulate, and adapt to the fast development of virtual currencies. Prohibiting virtual currency trading can buy time for the formulation of more comprehensive regulatory policies.

In summary, the main purposes of prohibiting virtual currencies in our country are to maintain financial stability, prevent financial crimes, strengthen capital control, and take temporary measures due to outdated regulatory technology and policies.