Wen Xinxiang, director-general of China Central Bank’s Settlement and payment department feels that the adoption of Crypto poses a threat to China.
The threat, according to Mr. Xinxiang, is problematic for the traditional system of finance.
Many people are adopting the use of Crypto. Bitcoin, for instance, is growing fast, with countries like El Salvador accepting the token as a mode of payment alongside the US dollar.
The executive aired out these concerns at a recent forum.
In his speech, the director gave a few reasons to back up his claims. Mr. Wen started by pointing out the market capitalization of Bitcoin, which is more than 800 Billion USD.
This capitalization is a problem because, unlike commercial banks that use the traditional system of payment, Crypto like Bitcoin can operate comfortably on their own.
Crypto’s have an anonymity feature that is eye-catching to investors; hence more and more get attracted. The problem with this anonymity attraction, according to Mr. Wen, is that both legal and illegal transactions can occur in the digital market.
China’s Central Bank Tries To Solve the Problem
According to Wen Xinxiang, the traditional financial system should pull up its socks and look for ways to attract investors. He pointed out that the digital assets market faces hardships that the conventional method can use in its favor.
The executive further discussed how China’s recent ban on Crypto mining is trying to solve this problem.
The Asian Country issued a ban on mining Cryptocurrencies earlier this year because of electric energy consumption rates. According to the country, the miners get way more profit.
Additionally, just this Friday, China declared all Crypto-related transactions illegal. According to the bank, the directive is there to ensure the safety of people’s assets and for the security of the country.
According to the Chinese Central bank, the unregulated market could lead to uninformed investors losing lots of money. The rule states that anyone who commits this offense is subject to thorough investigation.
Despite this, some crypto enthusiasts are still trying out the digital currency belonging to the country’s Central Bank, the digital Yuan. This move also aims to bring down the US dollar.
What is Cryptocurrency?
Cryptocurrency or Crypto is a mode of payment exchangeable online for services and goods and uses blockchain technology. Additionally, users can also trade them for profit.
Currently, more than 10,000 different Cryptos are publicly traded. Some examples include Bitcoin, Ethereum, Dogecoin, Safemoon, Ripple, and ZCash, among others.
For one to purchase any token, they require a wallet to hold your Crypto. So, register to have an exchange platform’s account( for example, Coinbase), transfer your real cash to purchase the tokens.
China’s crackdown might have caused a stumble in the Crypto market, but Crypto miners are moving to Crypto friendly areas.
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