Source: Mankiw Blockchain Law

0****1 **What is a market maker in the currency circle? **

Market Maker, a lofty-sounding term, is often associated with terms in financial fields such as stocks and futures, leaving countless novices in awe of the professionalism and high threshold involved. Market makers appear in the currency circle, and the superposition of quantum states between the two makes it even more confusing.

In fact, the market maker is not something mysterious. It was invented by the Dutch and designed to solve the liquidity problem in the market. To put it simply, in the market, you want to buy a certain stock (can be a futures or some kind of cryptocurrency) at a price of 100, but there is no seller at this price or at this time. But if there is no suitable seller, then Transactions have been unable to occur, and the market is bound to lack liquidity. We know that in a market that lacks liquidity, there is a price but no market, and funds and resources cannot be allocated rationally, which often leads to decline in the end. At this time, a second-hand dealer appears and is willing to sell you a stock (futures or cryptocurrency) at a price of 100, and his hand comes from the purchase from the previous dealer at a price of 90. In this way, you buy When it comes to stocks, he makes money, the exchange collects fees, and everyone has a bright future.

Therefore, market makers are a necessary mechanism for a mature market, increasing market liquidity and acting as a lubricant. The currency circle is no exception.

Nowadays, there are many exchanges in the currency circle, as well as some market makers, allowing everyone to buy (quan), enter (bei), sell (shou) and exit (ge) better in the field of cryptocurrency. Its principle is no different from that of market makers in the securities market, but the criminal risks faced by market makers in the currency circle are much higher.

0****2 **What are the risks for market makers? **

my country's securities trading market has strict access policies for market makers. For example, if you want to be a market maker on the Science and Technology Innovation Board, you must have a net capital of not less than 10 billion yuan in the last 12 months and a classification rating of A in the last three years. There are two high-threshold rigid conditions for A-level (inclusive) and above, and an application needs to be submitted to the China Securities Regulatory Commission, and only after its approval can one "hold a certificate to work."

Of course, this is the A-share Science and Technology Innovation Board, where beauty and wisdom coexist. It is a formal and legal "casino". This sector of our currency circle cannot be compared to the one where fathers do not love mothers and mothers do not love them. Major overseas market makers, such as Jump, Wintermute, Amber Group, B2C2, DRW Trading, etc., are not without problems (some have also been criticized due to large fluctuations in individual projects). The main reason is that they are not subject to Chinese criminal laws. There is no need to discuss it yet. We will mainly talk about the market makers of these domestic exchanges.

First of all, it should be pointed out that the current domestic secondary market for data storage is mostly consignment, resale and other models, and it does not involve market makers for the time being (but it may also be manipulated). We mainly talk about those that go underground and hide in mysterious corners. Exchanges.

As we all know, as soon as the September 4th Announcement came out, exchanges were shot and collapsed one after another. They went to sea to seek survival, and a small number of them went underground. These exchanges that have been transferred thousands of miles away often face insufficient liquidity due to lack of traffic, so they need market makers to invigorate the market, but this often becomes their "evidence".

The direct reason is that the September 4th Announcement explicitly prohibited it, requiring that "any so-called token financing trading platform shall not engage in the exchange business between legal currency, tokens, and 'virtual currencies', and shall not buy or sell tokens or act as a central counterparty to buy and sell tokens." or 'virtual currency', and shall not provide pricing, information intermediary and other services for tokens or 'virtual currency'."

In this way, it would be okay if it is an external market maker. Otherwise, this kind of behavior of acting as both a referee and an athlete can easily be regarded as "market manipulation." I am not saying that it constitutes the crime of "market manipulation". Of course, this The crime is not accurate. The correct name is "manipulating the securities and futures markets." The punishment is for those who "cut leeks" by illegal means in the regular and legal securities and futures markets. ** This gray area in our currency circle is not necessary. This crime is but if you buy and sell yourself, release false information, and sell goods, you may be involved in the crime of fraud. Of course, specific issues must be analyzed in detail. I did not say that it will all constitute the crime of fraud, but Be careful of investors’ persistence (reporting) when they become angry.

In addition to the crime of fraud, the most likely crime involved is the snake oil of economic crime - the crime of illegal business operations. ** Putting aside some qualitative disputes in practice (as a defense lawyer in a new field, I object to the abuse of this crime), the investigative agencies like to use this crime to catch everyone, so from a compliance perspective, this crime is A sword of Damocles hanging on the forehead may stab you with "original sin" full of holes from time to time.

Of course, in reality, there are still some gamblers who directly engage in gambling in the name of market makers. There is no doubt that they are suspected of constituting the crime of opening a casino, so I will not go into details here.

0****3 Conclusion

Market makers are often associated with "bankers" and become a nightmare for countless leeks. In the currency circle, an area where regulation is characterized by strong/no duality, market makers do seem to be more "making a difference". However, if it goes too far, some players may not just lose cards and flip the table.

Earning the money you deserve is always the best way.