China’s central bank is taking another chance with cryptocurrency

Much like other central banks, China’s central bank has taken another blow in cryptocurrencies: Bitcoin (BTC), stablecoins and “private digital currencies” – claiming they pose “risks that threaten financial security”.

China’s central bank takes another blow with cryptocurrency

At a recent press conference, Fan Yifei, Vice-Governor of the People’s Bank of China (PBoC), answered a question from a reporter about cryptocurrencies.

According to Sina Finance, Fan responded that cryptocurrency “has become a speculative tool” that “carries potential risks that threaten financial security and social stability”.

Fan added that cryptocurrency has also “become a payment instrument for money laundering and illegal economic activities”.

And he added that stablecoins issued by some commercial institutions – particularly global stablecoins – “can pose risks and challenges to international monetary, accounting and settlement systems.”

USD-backed stablecoins are very popular in China, where they are often used to buy BTC and altcoins, while companies like Facebook – which has its own global stablecoin-related plans – could suffer from the PBoC’s stance.

China’s central bank suffers another blow with crypto launch of the digital yuan

Fan concluded that the PBoC was “still quite concerned” about the matter and so recently took action. He did not rule out further measures, but also took the opportunity to present Beijing’s own alternative to the crypto market – the digital yuan.

The PBoC stated that the plan to move the token into the next phase in time for the Beijing Winter Olympics next year has been implemented, although it did not state that the nationwide rollout will be completed before the Games begin in February.

By comparison, the Bank for International Settlements (BIS) said in June that it was “clear” that cryptocurrencies are speculative assets, not money that is in many cases used to fund criminals. At the same time, the BIS is preparing the basis for digital central bank currencies (CBDCs), which “open a new chapter for the monetary system”.

Meanwhile, Sally Wang and Cheeseman of Sino Global Capital, heads of off-the-counter and institutional sales for the FTX exchange, did some analysis in an article for the FTX blog and published by Techflow a challenge for Beijing as using them means that the PBoC cannot track the flow of money. “

“The PBoC has always been very concerned about the risk of instability in capital outflows. China’s recent policy changes could be described as a “state attack” on Bitcoin. Its existence will prove its permanence, ”say the authors.

“Under tighter restrictions from the Chinese government, major Chinese exchanges such as Huobi and OKEx are seeing declining trading volumes. The Chinese crypto landscape has changed fundamentally in a very short time, ”added Wang on Twitter.

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