China Criticizes US Banking System As Bankers Call For Crypto Regulation – Cryptopolitan
Senior officials from China’s central bank have criticized the US the banking system for their struggle to service cryptocurrencies, while demanding stronger regulation of digital finance.
These comments come as the cryptocurrency industry continues to face challenges in the US, with several banks facing problems due to their involvement in crypto transactions.
At the Boao Forum for Asia Annual Conference 2023, Xuan Changneng, Vice Governor of the People’s Bank of China, emphasized the need to accelerate the improvement of regulatory mechanisms compatible with the digital economy.
He emphasized that financial supervision is a fundamental institutional arrangement to ensure the stable operation of digital finance, and the lack of supervision will reinforce irrational market behaviour.
Taking cryptocurrency as an example, Xuan Changneng explained that since the outbreak of the international financial crisis, major developed economies have implemented ultra-loose monetary policies for a long time, causing market participants to worry about the weakening of credit currency assets.
In this context, based on blockchain technology, cryptocurrency emphasizes the characteristics of decentralization and rule algorithms, and tries to form a countermeasure to credit currency, so it is sought after by many investors in an environment of abundant liquidity.
But from the point of view of actual operation, cryptocurrencies and those cryptocurrencies created out of thin air have not solved the problem of credit currency.
Xuan Changneng believes that the cryptocurrency field lacks effective supervision, and behaviors such as market manipulation, abuse of market transactions, and misappropriation of customer funds have repeatedly occurred. He believes that cryptocurrencies have many hidden risks due to trading platforms, traders and other reasons.
Xuan Changneng reminded that the cryptocurrency trading platform involves exchange with fiat currency, leveraged transaction costs and other links in the process of trading, which are controlled by the trading platform, the issuer, the dealer and the market maker. This is a very centralized matter.
Zhou Xiaochuan, vice chairman of the Boao Forum for Asia and former governor of the People’s Bank of China, stated that the definition of digital currency should not be “all-in-one” and there is no need to worry about “the winner takes all. “
Regulators must respect rules when innovating regulation
While there must be sufficient room for innovation, authorities must “verify and validate the new technologies applicable to different financial models and products, rather than simply accepting or approving them,” he said, adding that the regulatory philosophy, technology and capacity must be upgraded to ensure that financial innovation does not come at the expense of financial stability.
Chinese officials have long taken a hardline approach to the crypto industry. In 2017, the PBOC declared initial coin offerings illegal and called for an immediate halt to all related fundraising activity, dealing a blow to the then-burgeoning market for the sale of digital tokens that regulators viewed as a threat to financial stability.
In the same Boao Forum panel, Liao Min, a vice finance minister, warned of possible fragmentation of digital financial infrastructure going forward. He said China must become “deeply” involved in international cooperation and coordination of standard-setting.
