Representative from the People’s Bank of China (PBoC), has called Bitcoin an “investment alternative”. Li Bo, deputy governor of the Chinese central bank, also said stablecoins are feasible investments.
Some believe China is softening its tone towards Bitcoin and other cryptocurrencies. It can be a signal that it might be possible to have regulated crypto exchanges in the massive China market.
Since 2017, China has banned initial coin offering (ICO) activities in the nation. The government has ordered domestic crypto exchanges to stop the fiat on- and off-ramp channel for investors. But it does not penalise the ownership of crypto. Courts in China have regarded crypto as ‘legal property’.
“[A] crypto asset is an investment option, it is not currency itself,” said Li at the Boao Forum for Asia on Sunday. “We believe that encrypted assets [Bitcoin and stablecoins] should play a major role in the future either as an investment tool or as an alternative investment.”
Regarding China’s regulations towards crypto trading, Li said PBoC is still studying it and thinking about the appropriate regulatory requirements. Until the PBoC figures out what it needs to prevent these assets from creating serious financial risk, it will maintain the regulatory status quo, he said.
As China keeps its current stance on Bitcoin, Li highlighted the need for a strong regulatory framework on stablecoins. “If we want [stablecoins] to become a widely used payment solution we need a stronger regulatory rule, which is more stringent than Bitcoin’s current regulation,” said Li.
Stringent Regulation for Stablecoins
China is working on its own digital currency, called DCEP, or digital yuan. It is not a cryptocurrency and it is different to Bitcoin.
China is reportedly launching a DCEP trial in Shenzhen involving Hong Kong residents. Testing cross-border circulation of digital RMB in Shenzhen and Hong Kong, Hong Kong residents will be able to open digital RMB wallets ‘anonymously’ using a Hong Kong mobile phone number.
China also plans a major trial to foreign consumers during the Winter Olympics in Beijing in 2022.
Despite China’s aggressive development in its digital currency, PricewaterhouseCoopers (PwC) said the country with the most advanced CBDC project is the Bahamas, with its Sand Dollar.
Since last year, Bahamas’ Sand Dollar has been available for all residents in the nation. They can access the currency through a mobile-based digital wallet, or a physical payment card.
In its new report, the Big Four accounting firm said that over 60 central banks are exploring CBDCs – digital versions of a fiat currency backed by a central bank.
Recently, the UK government and central bank plans to further explore a potential CBDC for the nation. The Bank of England and the UK Treasury have announced the launch of a taskforce to explore the launch of a CBDC.
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