| Due to the emergence of the financial crisis,people's trust in traditional currencies has decreased while the rise of Bitcoin has attracted the global attention.Under the background of the RMB depreciation from 2014 to 2016,with the gradual tightening of foreign exchange controls and the severe crackdown on corruption,the trading volume of China's bitcoin market once accounted for 90% of the global total.It can be said that whether it is one of the hubs of the Bitcoin mining or it was the main trading market of Bitcoin,China has a significant impact on the growth of the bitcoin market.At present,China has issued a series of regulatory measures for virtual currency such as Bitcoin.Although the domestic Bitcoin exchange has been retired in 2017,the exchange channels of RMB and Bitcoin are still available on the OTC and overseas trading platforms,and domestic capital can still enter and exit the Bitcoin market.Does the huge Chinese market of Bitcoin imply that Bitcoin has become an emerging channel which could bypass foreign exchange control and regulatory review to achieve “exchange” in disguise? Is it possible that China's prohibition behavior of bitcoin trading is likely to avoid further expansion the scale of capital flight? Therefore,this paper combines bitcoin and capital flight,and carding the theoretical basis of bitcoin can become the emerging channels of capital flight and further analyze the transmission mechanism of capital flight,bitcoin market and RMB exchange rate;Constructing the DCC-GARCH model between the difference of CNY-CNH pricing differential rate and the fluctuation of bitcoin price to observe the dynamic time-varying correlation of them,then,explore whether Bitcoin is one of the channels for capital flight under foreign exchange control,and provide a basis for the necessity of supervision;As well as exploring the effectiveness of domestic regulation of Bitcoin,and making relevant policy recommendations based on the results.The conclusions drawn in this paper are as follows:(1)Before and after the announcement of the “Protection of Financing Risks for the Prevention of Subsidy Issuance” was tested,the correlation of the trading volume between the largest bitcoin trading platform,China and the United States indicates that Bitcoin can become a channel for capital flight and the role of government regulatory policies on bitcoin prices is negative.(2)The spread of the CNY-CNH pricing differential can be used as a market indicator to measure the expected depreciation of the RMB.The fluctuation of the exchange rate spread and the flow of cross-border funds are interact.The correlation between CNY-CNH pricing differential and bitcoin price has obvious time-varying characteristics,and there are abnormal fluctuations which has a large range.Every time,the huge fluctuations in the stock market and changes in international political patterns will significantly increase the dynamic correlation coefficient between exchange rate spreads and bitcoin price fluctuations.(3)Before the implementation of the supervision in 2013,the fluctuation of CNY-CNH pricing differential had a great connection with the fluctuation of bitcoin price,but with the implementation of supervision came into operation,the correlation between them was weakened.When the RMB continues to fluctuate,capital flows into the bitcoin market.As the Chinese market accounts for more than 90% of the market,bitcoin prices will increase substantially.The continually rising of market value will lead to more speculative asset inflows and affect the RMB exchange rate.(4)It is found that under the tightening of foreign exchange control,The correlation between CNYCNH pricing differential and bitcoin price is rising remarkably.The price and transaction volume of bitcoin have increased substantially also proves that Bitcoin is a kind of capital flight channel for evading regulation.(5)After the full closure of the exchange in 2017,the reduction of China's market share has a great impact on the bitcoin market;however,it has not completely prevented domestic capital from entering the bitcoin market.In other words,the policy role only has a short-term effect and has not completely cutting off bitcoin as a channel for capital flight in the long run.Future for emerging assets,including bitcoin-based virtual currency,this paper proposes the following three policy recommendations:(1)In view of the current fundamentally differences between bitcoin-based virtual currency and real currency in nature.In order to maintain the stability of the capital market,China needs to introduce relevant regulations as soon as possible to accurately define the legal attributes of virtual currency.(2)Supervision should be forward-looking: Improve the legal effectiveness level of regulatory norms,and promote long-term regulatory mechanisms.On the one hand,it strengthens the monitoring of cross-border funds,and raise attention to the price trend of the virtual currency trading market as a supplementary basis for judging the flow of cross-border capital trend;on the other hand,it can learn from foreign advanced experience and practices to set up a special virtual currency regulatory agency.(3)Enhance international cooperation and build a regulatory cooperation mechanism.Closely track the path of underlying technological transformation and derivative change trend of virtual currency represented by Bitcoin,and jointly crack down on the use of virtual currency transnational crim... |
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