In China, authorities are also fathoming the causal-effect depth of this year’s WannaCry cyberattack and the pricing about-turn, from 1,300 bitcoins for one U.S. dollar in 2009 to one bitcoin for over 3,000 greenbacks last month.
“Bitcoin may well serve an extra purpose of transferring value like through an illegal private bank. To some extent, it may have broken the existing management rules on capital control,” said Yang Tao, assistant to the director of the Institute of Finance and Banking with the Chinese Academy of Social Sciences.
The fifth function of this virtual money is a transfer of value of genuine money. Chinese individuals are allowed to get 50,000 U.S. dollars-worth of Renminbi to overseas each calendar year. Once equipped with bitcoins, those who so aspire can siphon more greenbacks out anytime they want.
“The illegality arises when one anonymously withdraws anywhere in the world the cash converted from bitcoins. Bitcoins can be an investment so long as investors stay put with them; they can also become hot money in and out of a (sovereign) country. Withdrawers can do anything with this cash,” said Li Lin, director of a bitcoin trading platform.
Traceability is another feature of real money for state authorities to fight money laundering and organized crimes. But the hitherto anonymity enjoyed in bitcoin trading has baffled law enforcement in most countries. Though strengthened supervision and upgraded trading platform are bringing the identities of bitcoin traders into picture, over-the-counter trading is still beyond the ken of law enforcement and financial regulation. And quite some traders have changed from trading on-the-floor to trading over-the-counter in China.
It’s not easy to cope with this issue from top-down; nor is it easy to do it from bottom-up.
This is because bitcoin trading has been designed to shun centralized control and peer-to-peer networking has been facilitating traders to dodge supervisors and regulators and tax collectors individually.
“Online traders have to have their personal information recorded and stored by service providers like us. But offline traders just skip this whole process,” complained Li Lin.
What’s more worrying for state regulators is the fact that some domestic trading portals still refuse to require real-name identification which gives further rise to illegal transactions. And there is nothing one can do about it.
“Technically speaking, it’s impossible to block over-the-counter tradings simply by closing down just one trading service, portal or platform,” explained Xu Zijing.