In their most recent financial stability report, the People’s Bank of China (PBoC) discussed challenges pertaining to cryptocurrency regulation and decentralized financing (DeFi), calling for an international initiative to create crypto regulations.In its most recent financial stability report, the Chinese central bank included a special section on cryptocurrency assets, emphasizing the necessity of international cooperation in the industry’s regulation.The research, which was released on December 22, claims that the cryptocurrency market makes up 1% of the whole financial system and has little to no relationship with traditional finance.
Colin Wu, a local industry journalist, claims that the PBoC’s most recent financial stability report includes a section specifically devoted to cryptocurrency assets for the first time.The central bank urged governments everywhere to follow the “same business, same risks, same supervision” strategy in the report in order to prevent regulatory arbitrage.The study mentioned a variety of possible hazards associated with regulatory arbitrage in the cryptocurrency space, including market manipulation, hacker attack vulnerabilities, and issues with DeFi government systems.The PBoC emphasized the need to control regulatory fragmentation and do away with supervision arbitrage, citing in particular the collapse of the Terra ecosystem and the demise of the FTX exchange in 2022.
China has moved to call on the international community to cooperatively regulate the cryptocurrency business, following the government of the Chinese mainland’s significant restriction on cryptocurrencies a few years ago.
In an effort to suppress the growth of cryptocurrency in mainland China, the People’s Bank of China (PBoC) formally outlined steps in 2021 and pushed for more interdepartmental coordination.Mainland China is still a major center for bitcoin mining despite the prohibition that applies to almost all cryptocurrency transactions and mining.Industry leaders like as Yat Siu, co-founder of Animoca, believe that mainland China’s cryptocurrency laws may change significantly as a result of Hong Kong’s explosive growth in the space.Some local executives, however, think Hong Kong’s crypto-friendly initiatives have little to do with China’s crypto policies.