Cryptocurrencies (and everything related to them) are still having a hard time in China. Now, the country’s central bank is “quite concerned” that privately developed cryptocurrencies could pose a risk to the global financial system. However, this is not directly about Bitcoin – because apparently the People’s Bank of China is a thorn in the side of stablecoins.
China’s central bank is “very alarmed”
China is apparently setting the course for a longer-term fight against cryptocurrencies. As CNBC reports, Fan Yifei, a deputy governor of the People’s Bank of China, has now commented on the issue. Yifei to reporters:
“The so – called stablecoins of some commercial organizations, especially global stablecoins, can bring risks and challenges to the international monetary system and the payment and settlement system, etc.“
Background Stablecoins: Stablecoins are digital currencies that are tied to a fixed value and thus do not have the volatility typical of cryptocurrencies (price fluctuations). The price of stablecoins is controlled by active or automatic monetary policy, a basket of currencies or other assets. The best-known stablecoin is probably Tether, it is ranked 3rd in the crypto top 10 by market capitalization-right after Bitcoin and Ethereum.
“We are still very concerned about this issue, so we have taken some measures.“
Consistent anti-crypto stance
Specifically, therefore, the closure of a crypto company was ordered last Tuesday. China is thus consistently continuing its anti-crypto stance. Already in 2017, the country had banned trading with cryptocurrencies such as Bitcoin. However, Bitcoin mining remained permitted – until around eight weeks ago. Large mining farms in several parts of the country had to cease operations. Fan added:
“These (digital) currencies have themselves become instruments of speculation.“
There would be potential threats to”financial security and social stability.” It is not surprising that cryptocurrencies such as Bitcoin could pose a problem for the PBoC. The Central Bank itself is working on a digital currency – the digital version of the Chinese yuan. It has been tested in different parts of the country since 2020 and has more than 10 million users, according to Fan.
However, the citizens of the country can not decide for themselves, as with Bitcoin (to buy from eToro or Libertex). Participation in the digital yuan is currently only possible with an invitation. And unlike Bitcoin, currency policy in China works centrally-not decentrally. It is not even possible to convert renminbi or yuan freely.
Bitcoin is thus a kind of counter-draft to the Chinese system-free, uncensorable, uncontrollable. Fan therefore describes the speed with which such payment systems are developing as “very alarming”.