Chinese Scholar Provides 6 Effective Ways to Protect Cryptocurrency Investors

On the evening of March 6, Yang Dong, Deputy Dean of Law School and director of the Fintech  and Internet Security Research Centre of Renmin University, shared his report titled “Why Investor Protection and Education are the Most Important Things to the Blockchain Industry at Present” in the “3 o’clock Sleepless Blockchain” WeChat Group. 

First of all, he analyzed the development situation of the current blockchain industry and drew a conclusion that this industry is full of serious risks and scams. Since there is no settled threshold for investors, some ICO platforms used a so-called “new technology” as a gimmick to trick investors. “Pump and dump” scams and illegal market manipulation are also involved, and investors have to bear the risk.

Yang Dong considered that, those blockchain related crowd funding financial activities serves and relies on the general public. They should effectively safeguard the opportunities for less affluent people to obtain financial benefits from relevant blockchain financial products. Investor protection, especially for medium and small investors in general, should be put in the first place.

In order to protect cryptocurrency investors and build a healthy environment for blockchain industry, Yang Dong made 6 specific suggestions:

  • Control the source, set relevant standards for digitalasset regulation;
  • Set the threshold for investors to enter the cryptocurrencymarket;
  • Establish an investor classification system, distinguish the financiersfrom the financing platform; focus on financial assets mismatch and improve the appropriateness of investors;
  • Investor protection sectors, including The People’s Bank of China (PBOC); China Banking Regulatory Commission (CBRC); China Securities Regulatory Commission (CSRC) and China Insurance Regulatory Commission (CIRC) may also come into play,strengthen regulation on the blockchain related financial activities;
  • Improve the multi-solutionmechanism for investor dispute;
  • Establish an ecosystemwith dispute resolution, protection and education factors through blockchain technology.

While establishing a investor protection system, Yang Dong also emphasize the importance of  investor education strengthen. He listed 5 main points:

  • Improve theeducation institutional construction for blockchain application industry and digital currency investor ;
  • build education funding and research base of applicationsof blockchain industry and the cryptocurrency investors, intensify the interpretation of industry policies, reinforce positive publicity and raise public awareness of risks;
  • Strengthen the financial knowledge and risk awarenessof general public;
  • strengthen professional investor education;
  • Promoteextensive social participation in blockchain industry.
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