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Beijing's new regulations lead to the 3.0 era of judicial disposal of Virtual Money.
New Trends in the Judicial Disposal of Virtual Money: The Beijing Model Attracts Follow
Recently, the Beijing Municipal Public Security Bureau's Legal Affairs General Team published an article regarding the disposal of involved virtual money, which has sparked widespread discussion within the industry. Many people feel confused about this, and some even believe it means that China might loosen restrictions on virtual money trading. However, this understanding has certain deviations and requires further clarification.
The Essence of the Beijing Model
The Beijing Public Security Bureau and the Beijing Equity Exchange (referred to as "BEE") have signed a cooperation agreement regarding the disposal of the involved Virtual Money. The disposal process is roughly as follows:
This model has been applied in a case at the Shunyi Branch of the Beijing Municipal Public Security Bureau.
The Historical Evolution of Virtual Money Disposal
The judicial disposal of Virtual Money in China has gone through three stages:
Disposal Period 1.0 (2018-2021): Direct monetization through exchange OTC or private channels, with compliance risks.
Disposal Phase 2.0 (September 2021 - 2023): Affected by the "9.24 Notice", the main method used is the foreign disposal and subsequent settlement into the country, but there are still compliance issues.
Disposal during the 3.0 period (end of 2023 to present): Adopt a joint disposal model both domestically and internationally, and legally convert after cashing out through compliant overseas platforms.
The new model in Beijing actually falls under the category of Disposal 3.0, which is not a first in the country.
Characteristics and Issues of the Beijing Model
The Beijing Stock Exchange actually plays an intermediary role and needs to delegate professional service agencies for actual disposal.
Require service providers to provide a performance bond of 110%, which is relatively high in practice.
There are some ambiguities regarding the regulations on service fees. The disposal of Virtual Money is not a typical public auction, so the setting of the reserve price may need further clarification.
It is worth noting that in some regions, the judicial authorities have agreed on disposal fee rates in the handling agreements that are relatively high, with some even reaching up to 35%. Currently, compliant disposal companies typically do not charge service fees exceeding 20%.
Future Outlook
Although the Beijing model has sparked speculation about whether China will liberalize virtual money trading, this view is premature. In fact, the judicial handling of the virtual money involved is ongoing and has not been prohibited. However, this does not mean that China will allow ordinary citizens to participate in virtual money trading in the short term. It is expected that in the next two to three years, mainland China will continue to maintain a strict regulatory stance on virtual money trading.
Overall, the new model in Beijing reflects the ongoing development and standardization trend in the field of Virtual Money judicial disposal, but it does not represent a fundamental shift in regulatory policy. All parties still need to closely follow the evolution of related policies and specific implementation details.