The People’s Bank of China (PBOC)’s Institute of International Finance has released a report identifying cryptocurrencies as a top priority for 2018. The document claims that widespread retail investment into cryptocurrencies has the potential to pose systemic risk to the Yuan, and also emphasizes the PBOC’s intention to expand its research and development into cryptocurrencies.
Strengthening of Virtual Currency Regulations Top Chinese Monetary Policy for 2018
The report emphasizes the risks perceived to be associated with virtual currencies by the Chinese government – specifically the potential for price volatility to manifest systemic risk to the yuan in the event of widespread retail investment, the potential for criminal misuse, and the lack of a robust regulatory framework providing consumer protections to investors.
The document advocates the strengthening of China’s regulatory framework regarding cryptocurrencies, calling for the development of a comprehensive procedure for monitoring the circulation of virtual currencies. The report also supports propositions that the G20 should lead efforts to establish a global regulatory framework with regards to digital currencies, advocating information sharing and cooperation between international regulatory institutions regarding digital currencies.
The report asserts that the popularity of cryptocurrencies has grown rapidly – attributing their dramatic rise to global demand for bitcoin’s utility of providing greater efficiency and reduced costs in conducting transactions.
The report also emphasized the targeting of MLM and pyramid schemes using cryptocurrencies as a priority for Chinese regulators.
PBOC Convenes Monetary Policy Conference
The PBOC also recently published a document providing a synopsis of the topics discussed during the central bank’s recent telephone conference on national currency, gold, silver, and monetary policy.
The document emphasizes the PBOC’s desire to expand its efforts asserts in the “promot[ing]the R&D of the central bank’s digital currency” as a primary monetary policy for 2018, indicating that the development of a long-rumored Chinese national cryptocurrency is still a top priority for China’s central bank.
The PBOC also described “the rectification of various […] virtual currency” markets as a desired policy outcome, emphasizing the need for strengthened anti-money laundering processes.
Do you think that China will be able to effectively enforce its cryptocurrency ban? Share your thoughts in the comments section below!
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Author: Samuel Haig