Chinese officials call for crypto regulation

Two Chinese officials have called for stronger regulation of cryptocurrency around the world.

Xuan Changneng, a deputy governor at the People’s Bank of China, said on Friday (March 31) that while regulators should allow room for innovation, they should also respect the existing rules and test the new technologies, Bloomberg reported on Friday.

Speaking at the Boao forum, Changneng pointed to examples of risks and fraud associated with crypto, including the failures of two US banks that had provided financial services to crypto-related firms, according to the report.

“The regulatory philosophy, technology and capacity must be upgraded to ensure that financial innovation does not come at the expense of financial stability,” Changneng said, according to the report.

At the same event, Liao Min, a vice finance minister of China, said China must become “deeply” involved in international cooperation and coordination of standards, according to the report.

As PYMNTS reported on March 3rd, the premise and promise of the crypto sector has been hit by bad actors and backdoor platforms, making the future more uncertain than ever.

In addition, US regulators, including the Federal Reserve, have asked financial institutions to be wary of “potential increased liquidity risk” presented by certain sources of funding from crypto-related entities, while the Securities and Exchange Commission (SEC) is maintaining its full-court press on the digital asset industry by telling investment advisors to be wary of cryptocurrency trading and lending platforms, stressing that they cannot be trusted as qualified custodians.

A week later, noting a series of recent lawsuits targeting crypto players, PYMNTS reported that observers critical of crypto are wary of giving the industry the validating halo that proper regulation can provide.

Instead, they prefer to bring legal action against it and allow the sector to dissolve in far-flung jurisdictions, the idea being that the regulatory crypto could encourage deeper and more difficult to separate relationships between the digital asset ecosystem and the traditional financial sectors – thereby generating greater systemic risks.

On March 23, the SEC issued a notice stressing to investors that cryptocurrency offerings across the US market may be illegal because they are not registered with the regulator.

As PYMNTS reported the next day, crypto’s road to regulatory acceptance is getting longer.