China’s Central Bank Warns Against Bitcoin and ICOs

November 09, 2018 | AtoZ Markets

People's Bank of China has issued a warning about the bubble risk posed by financing and investments on cryptocurrencies, as Bitcoin, and Initial Coin Offerings in particular.

Xu Zhong- director of the research bureau of China's central bank, and Zuo Chuanwei- a PBOC analyst, said in their paper that virtual currencies cannot replace legal currencies as they lack intrinsic value or credible sovereign backing.

In the paper as well, cryptocurrencies were described as “extremely vague in nature” which makes it hard for authorities to include them within the regulations of anti-money laundering policy and to trace "receipts" of financial transactions of them.

China still welcomes Blockchain!

The paper referred to that China has already banned all ICOs since September 2017, where the government identified ICOs as a form of illegal fundraising.
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The media reported as well that the Chinese authorities have been chasing ICOs channels since then, the thing that pushed ICO investors in the country to move their operations to Singapore, Japan, and Hong Kong.

Analysts read the aforementioned policy as contradictory to how the country welcomes blockchain technology.

It is worth mentioning in this context to remind that in May this year, President Xi Jinping described blockchain as one part of the technological revolution.

The Chinese government’s 13th Five-Year Plan proposed in 2016, included the blockchain technology as one segment of the economy China has in its development plan until 2020.

The paper recommended a more practical approach when using blockchain, which requires the government, therefore, to closely observe the technology to be able to anticipate, and promptly address financial risks that might arise.

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