Wang Yongli: From the perspective of financial supervision, the truth about Paypal “users can shop with cryptocurrency”

On October 21, U.S. time, many media in the U.S. reported that the U.S. payment giant PayPal issued a statement: It has obtained a Conditional Cryptocurrency License (generally called BitLicense) issued by the New York Financial Services Agency, and will pass and have a regulatory license Paxos, the custodian of cryptocurrency transactions, has cooperated to enter the cryptocurrency market, allowing customers to buy, hold, and sell cryptocurrencies through its online wallet on PayPal, and can start at its 26 million merchants in early 2021 Use cryptocurrency to buy any goods on the vast network system of the company. The initially supported cryptocurrencies mainly include Bitcoin (BTC), Ethereum (ETH), Bitcoin Cash (BCH), and Litecoin (LTC).

This news caused a lot of shock around the world, and the stock prices of Bitcoin and other cryptocurrencies and PayPal rose sharply, which also made many people’s confidence that cryptocurrencies may subvert or replace fiat currencies rebounded again.

Will it really be like this?

This requires careful consideration.

First of all, many countries now position Bitcoin, Ethereum, Litecoin and other cryptocurrencies as special “virtual assets” or “special assets”. The buying and selling and holding of these special assets will basically not be restricted, and it is also Will be protected by law. Those who are subject to restrictions and penalties are based on such special assets as the subject of unauthorized fundraising such as ICO and other illegal activities such as money laundering, tax evasion, and terrorist transmission. The focus of financial supervision is not the mining and direct transfer of cryptocurrencies in these networks, but the exchange of legal currencies with these cryptocurrencies. The focus is on the legality of the use and circulation of legal currencies. If the cryptocurrency is just the original currency, the original account (address) for trading, and the resulting profit and loss, there is no big problem. However, if a person purchases cryptocurrency with one legal currency and then sells the cryptocurrency and converts it into another legal currency (foreign currency), or transfers the cryptocurrency directly to others, then there is evasion of foreign exchange control and money laundering. , Tax evasion, terrorist transmission and other illegal acts. Therefore, the party who sells cryptocurrency to obtain legal currency should also strengthen the supervision of the legality of the source of legal currency. In fact, as long as cryptocurrency does not have an exchange relationship with legal currency, it can only operate in a specific network system, and will not have much impact on legal currency and the real world. Financial supervision does not need to pay too much attention. But if cryptocurrency is exchanged and transferred with legal tender on a large scale, it is impossible not to be valued and supervised by financial supervision!

As a result, PayPal and Paxos cooperate to provide exchange services, allowing customers to buy, hold, and sell cryptocurrencies through PayPal’s online wallet, and it is entirely possible to buy and sell these cryptocurrencies in the country’s transaction tax or The income tax system pays taxes in accordance with the tax law.

But it must be noted that few countries have announced that these cryptocurrencies can be used as currencies to circulate freely in their own countries. Because of this, it will inevitably impact the circulation and management of domestic legal tender. When the country where it is located has not announced that cryptocurrency can be used as currency to circulate freely, PayPal will directly use cryptocurrency for commodity price and settlement on its huge network of up to 26 million merchants. I am afraid it is difficult to obtain monetary authority or Licensed by the regulatory authority.

In fact, PayPal also stated that its users can use cryptocurrency to make purchases on its network, but they still need to settle in fiat currency, that is, merchants are still priced and settled in fiat currency and will not accept cryptocurrency payments. The purchaser actually needs to use the exchange service provided by PayPal to convert the encrypted currency into legal currency before completing the shopping payment. This is the truth of the so-called “users can shop with cryptocurrency”!

In China, the “People’s Bank of China Law” (draft revision for comments) states: “The legal currency of the People’s Republic of China is Renminbi.” “Renminbi includes physical and digital forms.” “Renminbi is uniformly produced and issued by the People’s Bank of China. No unit or individual is allowed to make and sell token tickets and digital tokens to replace the circulation of RMB in the market. To produce and sell token tickets and digital tokens to replace the circulation of RMB in the market, the People’s Bank of China shall Order to stop illegal activities, destroy illegally produced and sold tokens, coupons and digital tokens, confiscate illegal gains, and impose a fine of less than five times the illegal amount; if the illegal amount cannot be determined, a penalty of 100,000 yuan to 500,000 yuan Fines. If the circumstances are serious, they will be punished in accordance with the second paragraph of Article 61.” It can be seen that in China, no unit can use cryptocurrency (digital tokens) for commodity pricing and settlement to replace RMB in the market. Of circulation.