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Chinese central bank plans minimum, strict regulations for bitcoin, cryptocurrencies

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China seems to be shifting ground on the use of bitcoin and cryptocurrency as the deputy governor of the People’s Bank of China, Li Bo, said the digital currency could be considered as investment and payment options.

China had banned bitcoin and other cryptocurrency exchanges, limiting its citizens to peer-to-peer transactions like Nigeria’s central bank, but the Asian country is studying the digital asset – a decision that might lead to relaxation of the ban.

Currently, cryptocurrency is not seen as a legal tender in the country even though citizens are allowed to possess it, but in order to give full recognition, Bo said different regulations would be set.

Regulation for cryptocurrency as an investment will be different from guidelines set for crypto as a payment option. Bo said investment option will come with minimum regulation, while payment will attract strict regulations.

Bo said cryptocurrency will have to share the same faith with deposit money banks and quasi-bank financial institutions. The deputy governor said this at the Boao Forum for Asia on Sunday, April 18, 2021.

China looking to regulate cryptocurrency in the future rather than maintaining ban is a major breakthrough for the cryptocurrency market due to the economic size of the country in world trade.

“We believe that Bitcoin and stablecoins are encrypted assets. Encrypted asset is an investment option, it is not currency itself. It is an alternative investment, not currency itself. Therefore, we believe that crypto assets should play a major role in the future, either as an investment tool or as an alternative investment.

Read also: 32% Nigerians now use cryptocurrencies; Survey divides crypto experts

“If it is used as an investment tool, many countries, including China, are also studying what kind of regulatory environment should there be for such an investment method. Although this regulatory rule is the minimum regulatory rule, there are still regulatory rules.” Bo said.

He added that, “The second point is that for some stable coins, they are encrypted assets. If we want such encrypted assets to become a widely used payment solution, we need a stronger regulatory rule, which is more stringent than Bitcoin’s current regulation.

“Therefore, in the future, if any stable currency hopes to become a widely used payment tool, it must be subject to strict supervision, just like banks or quasi-bank financial institutions are subject to strict supervision.” Wu Blockchain, a Chinese media quoted Bo in a report.

However, until China reviews its policy on cryptocurrency, Bo said the central bank of China will continue to maintain the current measures and practices.

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