Chinese Central Bank Warns Against Cryptocurrencies
November 10, 2018 12:04 pm
These days it is very rare to find any positive stories coming out of China with cryptocurrency in the headlines. The central bank of China has again warned its citizens against cryptocurrency investments.
The People’s Bank of China (PBoC) has announced the risks associated with digital currency investments. Xu Zhong, Director of research bureau of China’s central bank, released the paper along with Zuo Chuanwei, a PBoC analyst.
In China, cryptocurrencies do not have any inherent value as the country does not want to replace them with fiat currencies. The document published by the bank said that cryptocurrencies are extremely difficult for authorities to track transactions or develop money laundering policies. This seems to be the essence of the issue for central bank since it wants full control over the flow of finances.
The document appreciates the blockchain technology and says that China still welcomes the nascent industry. The file suggested a more practical approach to distributed ledger technology and higher government oversight.
The central bank has also planned to clamp down on airdrops claiming that they are ‘disguised’ ICOs.
The PBoC report said:
“Take airdrops, where tokens are given out for free to participants, rather than raising funds directly in public via ICO, while reserving a portion of the total supply. These cryptocurrency startups then try to push tokens’ prices higher in the secondary market in a bid to reap profits.”
According to the document, the bank was going to clean up the cryptocurrency industry, whatever remains of it. It also included that digital currencies that are not issued by the government do not have legal status equivalent to fiat currencies.