People’s Bank of China (PBoC) maintains its anti-crypto stance and has warned that stablecoins, particularly those pegged against a major fiat currency are a threat to conventional financial and monetary systems. An executive at the People’s Bank of China has expressed concerns over growing popularity of cryptocurrencies and stablecoins in particular.
China is already planning to launch a Digital Yuan which is a CBDC. However, Wen Xinxiang, director of the payment and settlement department at the People’s Bank of China (PBoC), has said that the popularity of crypto is a major threat. He also advocated a hard handed approach to limit the use and curb the surging popularity of decentralized digital assets.
He noted that Bitcoin’s market capitalization is close to one trillion and Stablecoins alone have a cumulative market cap of about $120 billion. Wen opined that the threat is significant as the decentralized coins by design are inherently capable of operating independently without any government or centralized control.
He also said that the ease of operating and conducting transactions anonymously with decentralized currencies makes them a preferred choice for payments for illegal activities and tax evasion is rampant.
“The challenge of virtual currency is huge. When the traditional financial system responds to the competition in the financial industry from big tech companies, it can also rely on traditional methods such as law and supervision to increase anti-monopoly efforts and strengthen personal privacy and information protection,” he explained.
China has been anti-crypto since the beginning of this year. Earlier, it had been actively promoting cryptocurrencies but now they have already declared the launch of a Digital Yuan. The regulatory agencies are actively cracking down on the use of cryptocurrencies and have shut down major crypto-focussed portals and exchanges.