The willingness of the country to support a global regulatory framework for cryptocurrencies established by G20 stated China’s Central Bank.
The Institute of International Finance, a part of The People’s Bank of China (PBOC), presented a new insight to the country’s policy on its “Global Banking Industry Outlook Report” released this week. The central bank and the government have already much invested in Blockchain technology, but it may expand its plans to the launching of its national cryptocurrency.
According to the report, the PBoC insists on the view that the massive use of cryptocurrency as a retail investor could produce systemic risks to the CNY. However, the Institute of International Finance is in favor of establishing a global regulatory framework. This means that China is willing to eventually legalize trading and use of cryptocurrencies.
In the report, the extreme price volatility as a risk for the financial stability, the anonymity as an encouragement for money laundering activities and the lack of security against hacking consists of the most significant arguments against cryptocurrencies presented.
Furthermore, the document reads that the lack of effective coordination between countries leads to a regulatory vacuum. Consequently, the Institute suggests the strengthening of regulatory provision, cooperation, and coordination. The German and French Finance Ministers, earlier in this year, called for a global regulatory framework for cryptocurrencies, and South Korea’s watchdog, FSC, has suggested cooperating with China and Japan.
According to the report, China’s central bank expects various governments to increase their supervision over cryptocurrencies and to enhance the use of cryptocurrencies as a means of exchange and payments. “China should actively participate in the global governance of digital currencies” to influence the formulating of the regulatory rules for them.
Though China recognizes the value of Blockchain and crypto coins, the country is worried by the threat over the Yuan. The PBoC to tackle this problem is aiming at the development of its digital currency and the control over the unofficial digital coins.
China remains a top country in cryptocurrency mining activity despite the government’s crackdown on the activity, initial coin offering (ICOs), exchanges and chats and digital trading websites. This opening to a global regulatory framework implementation established by the twenty most powerful nations in the world is a strategic move to exercise influence and a development for the local cryptocurrency traders and users.