People’s Bank of China Says Bitcoin and Stable Coins Threaten Financial Security and Social Stability

  • The People’s Bank of China (PBOC) explains its stance on Bitcoin and stablecoins, saying they are speculative tools that threaten financial security and social stability.
  • Stablecoin crackdown continues ahead of digital renminbi pilot at Beijing Winter Olympics.
  • Further action will be taken if the use of Bitcoin and stablecoins as payment tools for money laundering and illegal economic activities continues.

The Vice Governor of the People’s Bank of China has expressed concerns about the use of stablecoins. He announced that the bank was already taking steps to address the threat posed by stablecoins.

Chinese crackdown on stablecoins

Fan Yifei, the Deputy Governor of the PBOC, said that the use of stablecoins like Tether (USDT) presents risks and challenges to the international monetary, payment and settlement system. Yifei argues that stablecoins have become a speculative tool for money laundering.

Global payment giants like Visa would disagree with China’s stance on stablecoins. The multinational financial services company recently stated that,

… Stablecoins are fast becoming an important part of the broader digital transformation of financial services, and Visa is excited to help shape and support this development.

According to multiple media outlets, key players in China’s cryptocurrency industry are promoting the theory that the country’s stablecoin crackdown could be a tactical move ahead of the launch of new pilots for institutional and commercial use of the renminbi. digital. This theory has its roots in the past when the central government attacked Google, Facebook and other sites before launching a public version of these companies.

Digital RMB driver for 10 million whitelisted users

Yifei mentioned in his statement that China is currently observing and studying private digital currencies that are not issued by the central bank. However, they are vigorously promoting both versions of the digital renminbi ahead of the Beijing Winter Olympics. The one issued to institutional entities such as commercial banks and the one issued to the public for day-to-day transactions.

The deputy governor of the PBOC mentioned that China has reached some consensus on the influence of the wholesale digital renminbi and studies reveal that it may not have any impact on the existing financial system. The same cannot be said for its retail version since it is not yet clear whether it can lead to financial disintermediation or weaken monetary policy. This is the main reason why the government runs pilots only for whitelisted users.

Currently, more than 10 million whitelisted users are lining up to participate in the digital renminbi pilot at the Beijing Winter Olympics.

Yifei said,

As far as I know, the number of whitelisted users has reached 10 million. I hope you can try it if you have the chance. The scene of the Beijing Winter Olympics is the key area for the next pilot. In this process, everyone here can enjoy such amenities. If you encounter any problems in use, you can also let us know and we will make adjustments in time.

Sarah J. Greer