PBOC Executive Criticizes US Banks for Crypto Risks, Demand Greater Regulation

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A top Chinese Central Bank executive is demanding stricter crypto regulation due to recent banking failures in the US. Xuan Changneng, a deputy governor at the People’s Bank of China (PBOC) stated that regulators should respect rules when innovating regulation.

He provided examples of issues including risks and fraud related to cryptocurrencies that two US banks ran into after providing crypto services such as deposits and settlements.

Although Xuan did not name the US lenders, the three banks at the heart of the country’s ongoing banking crisis include Silvergate Capital, Silicon Valley Bank, and Signature Bank. Notably, these banks were among the country’s most friendly crypto banks before their fallout in March.

In his opinion, he believes that authorities should check and confirm new technologies relating to various financial models, rather than merely accepting or sanctioning them. According to him, crypto regulation capacity and technology must be improved to ensure that financial innovation does not jeopardize financial stability.

Markedly, it is not the first time China is taking a strict approach toward crypto regulation in recent years. For instance, China’s State Council restated its position to crack down on crypto mining and trade in 2021, citing financial risks and energy consumption as justifications.

China Expands Blockchain Research

While China has been harsh on cryptocurrencies, it has been experimenting with the creation of its digital currency, the digital Yuan. The Chinese government sees the digital Yuan as a means of reducing reliance on the US dollar and increasing financial control. Currently, the digital Yuan is being tested in many Chinese cities.

Additionally, the Chinese Ministry of Science and Technology has now given the go-ahead for the opening of a blockchain research facility in Beijing. The ultimate goal for the creation of the center is to incorporate blockchain into everyday life by conducting a series of research into technology for industrial uses. 

Furthermore, the country has also announced plans to delve into the Non-Fungible Token (NFT) marketplace this year.

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