Law and Legislation

Chinese Central Bank Executive Calls Adoption Of Crypto A ‘Huge Challenge’

A Chinese central bank senior has cautioned that the increasing acceptance of cryptocurrencies such as Bitcoin (BTC) poses a big threat to the existing banking system.

Wen Xinxiang, director of the People’s Bank of China‘s (PBoC) payments and settlements department, expressed concern about the growing popularity of cryptocurrencies and fiat-pegged stablecoins.

During a payment and settlement seminar, Wen addressed the key concerns linked with the crypto sector, pointing out that Bitcoin’s market value has surpassed $ 800 billion and the overall market cap of stablecoins has surpassed $ 120 billion. The Shanghai Securities Journal reported on September 24.

One of the primary obstacles of crypto, according to the official, is that it can operate independently of the existing payment system supported by commercial banks and payment organizations. Cryptocurrencies also cause challenges for bank payment systems, according to Wen, by diminishing the strength of clearing agencies.

Wen also noted that cryptocurrency’s perceived anonymity made it an appealing instrument for criminal operations like money laundering, and he called for more steps to help the traditional banking system compete with cryptocurrency:

“THE DIFFICULTY OF VIRTUAL CURRENCY IS MASSIVE. WHEN THE TRADITIONAL FINANCIAL SYSTEM REACTS TO COMPETITION FROM LARGE TECH COMPANIES IN THE FINANCIAL INDUSTRY, IT CAN USE TRADITIONAL METHODS LIKE LAW AND SUPERVISION TO INCREASE ANTI-MONOPOLY EFFORTS AND STRENGTHEN PRIVACY PROTECTION.”

Wen’s comments reaffirm the Chinese government’s anti-crypto position, as the country has continued to crack down on cryptocurrency trading and mining this year, with local governments shutting down multiple mining farms and suspending cryptocurrency trading.

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