China Published A positive Article On Bitcoin. But Why Is Crypto Banned In China?
After Trump’s tweets on Bitcoin, The People’s Bank of China comes out to the crypto scene. Yesterday, the regulator published an article on the official website that reveals the concept of Bitcoin, its operating mechanism, and the history of one. The document ends with the announcement of a Libra project from Facebook.
The People’s Bank of China also paid attention to issues related to the Bitcoin’s rate, namely its limited issue. Recall that the limit of Bitcoin’s supply is 21 million BTC only and the last block will be mined in 2140. Among other factors pushing the price up are a growing mining complexity and a means of value saving.
Another positive point noted in the article is a more comfortable usage of cryptocurrency as a global tool for global remittances.
The regulator also warns users about the risk of speculation and the lack of security of cryptocurrency funds. As an example, the history of hacking of a currently defunct cryptocurrency exchange Mt.Gox.
The Development of The Digital Yuan
Historically, the Chinese authorities were opponents of cryptocurrency, banning both the operation of cryptocurrency exchanges and ICOs inside the country in 2017. At the same time, cryptocurrency storage is no prohibited in China.
Bitcoin demonstrates all the characteristics of a safe asset and attracted the attention of many investors.
Also, interest in the market is growing against the backdrop of the expected launch of Libra digital currency from Facebook.
But, according to the former governor of the People’s Bank of China (PBoC) Zhou Xiaochuan, the concept of a global digital currency that can be exchanged for fiat, which Facebook introduced, threatens existing cross-border payment systems and may weaken the position of sovereign currencies.
According to him, the Chinese authorities need to strengthen the national currency and consider the Hong Kong model to create a digital yuan, which involves the issuance of money by commercial enterprises under the supervision of the regulator.
Some analysts have already expressed the view that the task can be placed on the technology giants Alibaba and Tencent.
Earlier, head of the research bureau at the People’s Bank of China Wang Xin expressed concern about the observed dominant role of the US dollar in the basket of currencies with which Libra should be supported.
He also said that the central bank has already received permission from the authorities to develop its own digital currency, but he did not specify at what stage this process is.