Key takeaways:
- The PBoC discussed concerns about cryptocurrency regulation and DeFi, advocating for a global initiative to create crypto regulations.
- The cryptocurrency market makes up 1% of the world’s financial system and has little to no relationship with traditional finance.
In its most recent financial stability report, the People’s Bank of China (PBoC) discussed concerns about cryptocurrency regulation and decentralized finance (DeFi), advocating for a global initiative to create crypto regulations.
In its latest financial stability report, the Chinese central bank included a special section on digital assets, emphasizing the necessity of international cooperation in regulating the sector.
According to a report released on December 22, the cryptocurrency market makes up 1% of the world’s financial system and has little to no relationship with traditional finance.
For the first time ever, PBoC’s most recent financial stability report has a specific section devoted to cryptocurrency holdings. In order to prevent regulatory arbitrage, the central bank urged governments everywhere to adopt the same business, same risks, and same supervisory strategy in its report.
The paper mentioned several possible hazards associated with crypto regulatory arbitrage, including market manipulation, hacker attack susceptibilities, and worries about DeFi government processes.
The collapses of the FTX exchange and the Terra ecosystem were notably brought up by the PBoC, which also emphasized the need to control regulatory fragmentation and do away with supervision arbitrage.
A few years after the government of mainland China imposed a significant restriction on cryptocurrencies, China moved to persuade the international community to regulate the cryptocurrency industry jointly.
The People’s Bank of China (PBoC) formally said in 2021 that it will take action to resist the acceptance of cryptocurrencies in the Chinese mainland. It advocated for tighter interdepartmental cooperation in the battle against cryptocurrency activity.
Mainland China has continued to be a significant center for Bitcoin mining despite the prohibition that applies to almost all cryptocurrency transactions and mining.
Hong Kong’s financial regulator announced on December 22 that it is prepared to accept applications for spot cryptocurrency exchange-traded funds (ETFs). The SFC emphasized that any cryptocurrency transactions involving these ETFs must occur through financial institutions that have been approved or through SFC-licensed cryptocurrency platforms.
