Chinese Central Bank Urges the World to Jointly Regulate Crypto – In its recent financial stability report, the People’s Bank of China tackled concerns regarding cryptocurrency regulation and decentralized finance (DeFi), urging a global collaboration to establish consistent rules for crypto.
In its latest financial stability report released on December 22, the People’s Bank of China dedicated a distinct section to cryptocurrency assets, emphasizing the necessity for collaborative international regulation. The report highlights that the cryptocurrency market constitutes 1% of the global financial system and has limited ties with traditional finance.
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As reported by industry journalist Colin Wu, the People’s Bank of China’s most recent financial stability report includes a distinct section exclusively focused on crypto assets for the first time. The report urges global governments to adopt the “same business, same risks, same supervision” approach to prevent regulatory arbitrage.
Highlighting various risks associated with cryptocurrency regulatory arbitrage, the report mentioned potential vulnerabilities such as hacker attacks, market manipulation, and concerns related to DeFi governance mechanisms. The People’s Bank of China specifically cited the collapse of the Terra ecosystem and the downfall of the FTX exchange in 2022.
Underscoring the importance of addressing regulatory fragmentation and eliminating supervision arbitrage. China’s recent call for global collaboration in regulating the cryptocurrency industry follows its significant ban on crypto issued a few years ago. In 2021, the People’s Bank of China (PBoC) officially introduced measures to combat cryptocurrency adoption within mainland China.
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Emphasizing enhanced inter-departmental coordination to crackdown on crypto activities. Despite the ban, which encompasses nearly all crypto transactions and cryptocurrency mining, mainland China has sustained its position as a significant crypto-mining hub. Industry figures, including Animoca co-founder Yat Siu, suggest that the swift adoption of crypto in Hong Kong might signal significant developments in crypto regulation in mainland China. However, contrasting views from other local executives suggest that China’s stance on crypto may not necessarily influence crypto-friendly initiatives in Hong Kong.