The central theses
- Li Bo, the deputy governor of the People’s Bank of China (PBOC), said Bitcoin was an “investment alternative”.
- This is the first time a senior regulator in China has mentioned bitcoin in these terms.
- At an economic conference, the deputy governor said that private stablecoins needed more regulation than Bitcoin.
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China’s Alpha Bank has issued a statement calling Bitcoin an “investment alternative”. The comments contradict the country’s longstanding opposition to the leading cryptocurrency.
Official Central Bank Notice on Bitcoin Regulation
Li Bo, deputy governor of the People’s Bank of China (PBOC), spoke at the Boao Forum for Asia, an economic conference attended by various leaders, including China’s President Xi.
“We see Bitcoin as a crypto asset. Crypto assets are investment alternatives and not a currency in and of themselves. The main target we see for crypto assets are mostly investment alternatives. “
This is the first time a senior regulator in China has identified Bitcoin as an investment and differentiated it from its currency use.
Breaking: Li Bo, deputy governor of the Central Bank of China, said crypto-assets like bitcoin should be used as investment vehicles or alternative investments. This is the first time the Chinese government has recognized the asset of cryptocurrencies. pic.twitter.com/bgDIVA1eMJ
– Wu Blockchain (@WuBlockchain) April 18, 2021
For years, the People’s Bank of China (PBOC) has been against the use of cryptocurrencies in their economy, citing their illegal uses such as money laundering and tax evasion. Chinese regulators banned the first coin offering (ICOs) in 2017, and a year later imposed a complete ban on cryptocurrency trading.
Stablecoins such as Tether (USDT) have reportedly been used extensively in China for money laundering and illegal gambling.
In response to the popularity of cryptocurrencies, China also introduced the digital yuan, its official central bank (CBDC) digital currency.
Deputy Governor Li suggested that China’s central bank appears to be more concerned about privately issued stablecoins. He said that stable coins used as payment solutions need tighter regulation than Bitcoin and like a bank it needs to be strictly regulated.
“In the future, any stable coin that aims to become a widely accepted payment solution will require very strict regulation, as will a quasi-bank that performs this type of function.”
Deputy Governor Li not only hinted at a possible regulation of Bitcoin in China, but also made it clear that the speculative nature of cryptocurrencies continues to pose a risk to China’s economic stability.
As a result, the central bank will continue to adopt strict measures and practices regarding cryptocurrencies until clear rules are finalized, Li added.
Despite the ban on crypto trading, China remains a leader in mining, contributing more than half of the hash power on the Bitcoin network.
Regulations lower bitcoin prices, Research says
The introduction of regulations means that bitcoin and cryptocurrency prices tend to fall, according to a new study. News about crypto rules negatively affects the price of Bitcoin.
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