China Proposes Six-Point Blueprint to Advocate Global Cryptocurrency Regulation
China’s central bank, the People’s Bank of China (PBC), has released its Financial Stability Report for 2023, which focuses on the regulation of crypto assets. The report highlights the rapid growth of the global crypto market and emphasizes the need for consistent oversight. It calls for uniform regulation across the board, stating that the same business should have the same risks and supervision.
One of the key points in the report is the need for global collaboration in regulating crypto assets. It mentions France’s recent acknowledgment of crypto risks as a sign of growing international consensus on the matter. The report also identifies concerns related to crypto assets, such as insider control, hidden asset transactions, and data security issues with blockchain technology. The increasing volatility and speculative nature of crypto assets have been a cause for concern since 2022.
To address these challenges, the PBC outlines a six-part strategy. This strategy focuses on access, internal controls, operational aspects, governance, exit strategies, and enhanced supervision. The report also examines governance models in decentralized finance (DeFi) and warns of potential risks from transparent cross-border transactions.
Despite crypto assets currently making up only 1% of the global financial system, the report emphasizes the need for regulatory changes and market reforms. It suggests updating registration systems and empowering regulatory bodies with a “negative feedback” mechanism to manage market risks.
The report also references specific incidents, such as the FTX collapse and fraudulent activities in DeFi, to highlight the importance of proactive measures. It calls for addressing potential issues like mismatched financial obligations and excessive leverage. The report also stresses the importance of international collaboration in addressing cyber threats facing crypto assets.
In conclusion, the PBC’s report reaffirms its commitment to a comprehensive regulatory framework for crypto assets. It aims to mitigate risks and strengthen the global financial system through international cooperation and regulatory restructuring.