Very few positive stories come out of China with cryptocurrency in the headlines. This one is no different as the central bank has continued with its rhetoric over the risks of dealing with digital currencies.
Same Old Story; Crypto Bad, Blockchain Good
The People’s Bank of China has issued another warning over its perceived bubble effect associated with cryptocurrency investing. Director of the research bureau of China’s central bank, Xu Zhong, penned the paper along with Zuo Chuanwei, a PBoC analyst, according to reports.
The notion that digital currencies have no intrinsic value was once again used to state that they could never been seen as a replacement for fiat currencies. The paper went on to say that digital currencies are extremely vague in nature making it difficult for authorities to track transactions or implement money laundering policies. This appears to be the crux of the issue for central banks; they want full control over flow of finances.
The paper went on to reiterate that Beijing has already banned initial coin offerings, declaring them illegal forms of fundraising. All ICO channels, media and projects have also been heavily censored resulting in the majority of them leaving for more conducive climes such as Singapore, Hong Kong and Japan.
The paper did praise blockchain technology however stating that China is still welcoming of the nascent industry. It recommended a more practical approach to distributed ledger technology and recommended higher government oversight. This has already happened with a recent crackdown on users of blockchain based services in China.
In its latest war on crypto China has plans to clampdown on airdrops claiming that they are ‘disguised’ ICOs. In a similar report the PBoC stated;
“Take airdrops, where tokens are given out for free to participants, rather than raising funds directly in public via ICO, while reserving a portion of the total supply. These cryptocurrency startups then try to push tokens’ prices higher in the secondary market in a bid to reap profits.”
It added that the bank was going to ramp up efforts in order to clean up the crypto industry, or what remains of it, in China. Hinting that the only crypto allowed within its borders will be a state backed on, the bank continued stating “Crypto assets which are not issued by the government do not have legal status equivalent to fiat currencies.”
Similar warnings have been issued in Thailand recently where the ruling junta appears to be mimicking moves made in China. Business leaders and academics are welcoming blockchain and crypto with open arms but, unsurprisingly, the military leaders want more control. In South Korea meanwhile, lawyers have urged the government to issue a clear regulatory framework for the industry in order for it to flourish.
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Author: Martin Young