Chinese regulator Li Bo, People’s Bank of China’s (PBoC) deputy governor, has said over the weekend that the law considers both Bitcoin and stablecoins as ‘alternative investments’.
During the Bo’Ao Asia Forum, Li Bo said:
“We regard bitcoin and ctablecoins as crypto assets. Crypto assets, as Agustin just discussed, are investment alternatives, they are not a currency per se. The main goal we see for crypto assets, going forward, they are mainly investment alternatives.”
Stablecoins are also cryptocurrencies that are pegged to certain fiat currencies. Let us consider Tether, which is a crypto that is pegged against the US Dollar on a 1:1 basis. They are redeemable for each other and their supply can be matched equally to the underlying assets.
Stablecoin market including Tether and USDC is a huge market, representing more than US$48 billion and US$12.5 billion worth of US Dollars. However, in most countries, they remain in a regulatory gray area. However, more and more authorities have started to take notice and are therefore creating relevant policies for their smooth functioning in the broader ecosystem.
Li Bo said that the issuers of stablecoins need to be regulated legally as traditional banks if they gain widespread popularity in China. He said:
“For stablecoins, they are crypto assets, and if they want to be accepted widely as a payment solution, we need stronger regulations, stronger than bitcoin maybe, in the sense, something like a currency board… Going forward, I think stablecoins, which may have the vision to become a widely accepted payment solution, has to be regulated like a bank or a quasi-bank.”
China hasn’t outrightly banned the ownership of cryptocurrencies. In fact, certain courts in China are also considering cryptos as “legal properties” for settling matters in previous instances.
Li Bo, one of the deputy governors of People’s Bank of China, said that they will keep maintaining the existing regulations for the cryptocurrency market until newer laws are introduced. As of now, the legal back-and-forth continues. Bo said:
“As for investment alternatives, many countries, including China still, [are] looking into it and thinking about what kind of regulatory requirements – maybe minimal but we need to have some kind of regulatory requirement – to prevent the speculative nature of such assets [from creating] any serious financial stability risk.”
The PBoC governor has made it clear that when it comes to the development of the digital yuan, it is on track. The Chinese state-backed digital yuan (which is pegged to that of Chinese currency Yuan) is slated for a launch in mid-2022. Reports say that China has already started extensively testing it in the region.
While addressing the concerns, Bo assured other governments to not fear. He said:
“Our goal is absolutely not to replace the U.S. dollars or any other international currency. Our goal is to let the market to choose.”
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