Cryptocurrency Statement From China Central Bank Officials

Some Chinese central bank officials continued to call for strong regulation of cryptocurrencies after criticizing US banks for their troubles in servicing cryptocurrencies in their recent statements. However, Chinese officials have noted that collusion of Bitcoin and cryptocurrency trading platforms, coin issuers, traders and market makers is highly prone to market manipulation.

Zhou Xiaochuan, Vice Chairman of the Boao Forum for Asia and former Chairman of the People’s Bank of China, said in his speech that every three to five years, the definition of digital currency should not be privileged, as technology and various application changes will lead to a change in the situation. Xiaochuan spoke at the Boao Forum for Asia 2023 annual meeting “Financial Infrastructure and Financial Services in the Digital Age” sub-forum.

Speaking at a panel at the Boao Forum on Friday, Xuan Changneng, Vice Chairman of the People’s Bank of China, said:

The risks and fraud associated with cryptocurrency, including two US banks that have been in trouble after providing many services for cryptocurrency, from deposit acceptance to payment, have demonstrated that regulators must respect the rules when innovating regulation.

Cryptocurrency trading platforms include swaps with fiat currencies, leveraged transaction costs and other links in the process of executing transactions. These links are under the control of the trading platform, issuer, sellers and market makers. This is a very central building.

Changneng said that while there should be ample room for innovation, authorities should verify and approve new technologies applied to various financial models and products rather than simply accepting or approving them.

Deputy Finance Minister Liao Min warned at the same Boao Forum panel that the digital financial infrastructure could break down in the future. He said China should be deeply involved in international cooperation and standard-setting coordination. Li Bo, deputy director general at the International Monetary Fund, added that central banks globally should consider digitizing their reserves as part of measures to improve the efficiency of international payments.

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