The Peoples Bank of China (PBoC) held its 2018 National Currency Gold and Silver Work Video and Telephone Conference on March 28 where among all things currency related the continuation of strict regulations on cryptocurrency was announced.
Conference Establishes Strategy to Protect Yuan
Deputy Governor of the PBoC Fan Yifei attended and delivered a speech in which measures to protect the value of the Yuan were outlined.
Though much of the time was dedicated to acknowledging the accomplishments of the PBoC through the previous year there were other points on the agenda, one of which was the development of the PBoC’s own digital currency and the control of unofficial ones.
Speaking of the government developed digital currency Fan said “Efforts were made (by the PBoC to strengthen the management … steadily promoted the development of the central bank’s digital currency,” and then later in the speech when naming objectives for the coming year he called for the bank to “solidly promote the R&D of the central bank’s digital currency,”
As he moved on to measures to protect the value of the Yuan he talked extensively about detecting and eliminating counterfeit currency in the system as well as the need to “carry out rectification of various types of virtual currencies”
Though he never spoke outright about Chinas regulatory stance on cryptocurrency the absence was emblematic of the government’s strict though often self-conflicting stance.
Do What I say, Not What I do
Once a dominant market for Bitcoin China’s crackdown on both foreign and domestic cryptocurrency has been extensive. Banning ICOs, crypto related websites and freezing accounts used in digital trading have all become standard practice in the country.
PBoC governor Zhou Xiaochuan has been clear that the country does not recognize digital currencies as it does traditional fiat saying the “The banking system does not accept it.”
At the same time, the PBoC is planning its own ‘official’ digital currency called DCEP (Digital Currency for Electronic Payment) which will be in development through to 2019. The currency will strictly suit the needs of the country according to Xiaochuan, who elucidated by saying it should focus on “convenience, rapidity, and low cost in a retail payment system while taking into account security and protection of privacy.”
China has even bucked the trend that most other countries with stringent regulatory policies have established. That of damning cryptocurrency while embracing blockchain and distributed ledger technology. Xiaochuan has warned that the expansion of the emerging technologies could have a negative effect on consumers and cause financial instability.
Yet the Government has sponsored crypto and blockchain related research and development for years and just last week sent a delegation to Australia to study how blockchain can be used to advance the countries fintech industry.
It seems China’s fear is not of the developing technology but, of developing technology creating an alternative to the Yuan and of the hundreds of billions in lost revenue that may result from people bypassing the official currency in favor of a global decentralized digital one that allows them to spend how, where and when they wish.