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Li Bo, deputy governor of the People's Bank of China, said at the Boao Forum for Asia yesterday that Bitcoin and stablecoins are crypto-assets as alternative investment options and may play a key role in certain areas in the future, but they still require strong supervision. to ensure it is not used for criminal activities such as money laundering.

Bitcoin (BTC) has continued to weaken since setting a new all-time high on the 14th and pushing to US$64,800. On the 18th, it even fell off a cliff, falling more than 15.1% in a single day and pulling it back below US$51,000, causing the entire cryptocurrency market to All were implicated, with the total market value evaporating by nearly US$200 billion and setting a single-day contract liquidation record.

Bitcoin's big plunge coincided with the Boao Forum for Asia, and invited participants Li Bo, deputy governor of the People's Bank of China, and former governor Zhou Xiaochuan used the topic to play a role in the meeting, calling for a rigorous regulatory framework for crypto assets such as Bitcoin to Prevent money laundering, tax evasion, etc., and ensure that they contribute to the real economy.

Maintain consistent regulatory attitude

At the Boao Forum for Asia, the host asked Li Bo whether the People's Bank of China would maintain the tough measures it had taken many years ago against cryptocurrency trading. The host mentioned the "Announcement on Preventing Financing Risks of Token Issuance" issued on September 4, 2017, commonly known as the September 4th Ban, which strictly banned the ICO (Initial Coin Offering) craze that was popular around the world at that time.

Li Bo responded that the People’s Bank of China believes that Bitcoin and stablecoins are crypto assets. An asset is an investment option, not a currency, but an alternative investment.

He said China’s central bank believes cryptoassets will have key utility, possibly as an investment tool or alternative investment option. Before doing so, the competent authorities must first study how to create a suitable regulatory environment.

“If we use it (Bitcoin and stablecoins) as an investment tool, many countries, including China, are also studying what kind of regulatory environment there should be for such an investment method. Although this regulatory rule is the minimum regulation Rules, but there must still be regulatory rules. And we must also ensure that speculation in such assets does not cause serious financial risks. In other words, we will have to figure out what regulatory rules are needed. Continue with current initiatives and practices.”

Li Bo also added that if stablecoins are to be used as a crypto-asset that is more widely used in payment solutions, a more stringent regulatory framework than Bitcoin will be required. He emphasized that stablecoins, as a payment instrument issued by private companies, must comply with regulatory standards comparable to quasi-banks or banks.

Real Economic Impact

Zhou Xiaochuan, former governor of the People's Bank of China, also agreed with Li Bo's statement. He pointed out that regardless of whether it is account-based or token-based, as long as it is taken out from a digital wallet, it is considered a cryptocurrency; regardless of whether it is decentralized or not, the only thing people need to know is that they cannot use this system to launder money. , tax evasion, drug, weapons trading and other illegal activities.

Zhou Xiaochuan said that when China considers these issues, it pays special attention to their impact on the real economy. He emphasized: "Finance is to serve the real economy. Whether it is digital currency or digital assets, it should be closely integrated with the real economy."

Zhou Xiaochuan took the 2008 subprime mortgage crisis that led to the birth of Bitcoin as an example. Several phenomena that occurred at that time were that financial products were separated from the real economy, including shadow banking, derivatives, etc., and became purely speculation among several financial institutions. trade. Competent authorities cannot understand what financial institutions are doing privately, and naturally cannot do a good job in internal control.

However, Zhou Xiaochuan still has no answer as to the benefits of Bitcoin to the real economy.

Therefore, Zhou Xiaochuan said that what he said does not mean that we should draw conclusions about crypto assets such as Bitcoin now, but to remind investors to be careful. He pointed out that China has always encouraged innovation in financial products, but it only requires industry players to pay attention to whether they are making contributions to the real economy.

Chinese Digital RMB

Central Bank Digital Currency (CBDC) is one of the projects currently involved in the arms race among various countries, and China’s Digital RMB (DCEP) progress has already led the world. China's six major state-owned banks opened the public to apply for DCEP wallets last month and plan to open them in 2022
Large-scale testing was conducted at the Beijing Winter Olympics in 2016.

Li Bo also briefly explained the current progress of DCEP at the Boao Forum for Asia. He said that the People's Bank of China has not yet determined a specific timetable for the launch of DCEP. It is currently continuing to conduct actual tests in various places, and continues to expand the scope of tests, step by step to build the DCEP ecosystem, improve safety and reliability, and formulate corresponding laws and regulations. Regulatory system.