The People’s Bank of China recently addressed issues that are related to the regulation of cryptos, NFTs, and decentralized finance (DeFi) in its latest financial stability report.
Interestingly, the People’s Bank of China (PBoC) has resolved issues related to crypto regulation and decentralization finance (DeFi) in its latest financial stability report, in which it now calls for a global effort to establish crypto rules.
The Chinese central bank devoted a separate segment to crypto assets in its new financial stability report, insisting on the need for the sector to get regulated using joint efforts by various nations. Published on December 22, the report stated that the crypto market accounts for 1% of the global financial network, and its connection with traditional finance is limited.
Based on a statement by the local industry journalist Colin Wu, PBoC’s most recent financial stability report has devoted a separate section to crypto assets for the first time. In this report, the central bank called on governments globally to apply the strategy of “same business, same risks, same supervision” to avoid any regulatory arbitrage.
The People’s Bank of China report referred to several potential risks that stem from crypto regulatory arbitrage, referring to vulnerabilities to hacker attacks, market manipulations, and concerns related to decentralized finance (DeFi) government mechanisms. The PBoC particularly
This report referred to several potential risks arising from crypto regulatory arbitrage, referring to the vulnerabilities to hacker attacks, market manipulation, and worries related to the DeFi government mechanism. The PBoC particularly mentioned the Terra ecosystem collapse and the rapid implosion of the FTX exchange in 2022, insisting on the need to manage regulatory fragmentation to help eliminate supervision arbitrage.
China’s move to urge the global community to regulate the crypto sector jointly comes several years after the government of mainland China issued a major ban on crypto.
In 2021, the PBoC officially announced measures to help fight against crypto adoption in mainland China, pushing for stronger inter-departmental coordination in cracking down the crypto activity in the nation. Despite this ban covering nearly all crypto transactions and crypto mining, mainland China has remained a massive crypto-mining hub.
Based on some reputable industry executives such as Animoca co-founder Yat Siu, Hong Kong’s quick crypto adoption may signify some “big moves” moving forward in crypto regulation and mainland China. On the flip side, other local executives think that China’s crypto stand does not have anything to do with crypto-friendly moves in Hong Kong.
