An esteemed representative from the People’s Bank of China has issued a pressing call to regulators to exercise caution when implementing crypto regulations.
As the world becomes increasingly digital, the risks of cryptocurrency fraud and other potential threats to financial stability have become more prevalent.
In light of this, the Chinese official urged authorities to learn from the mistakes of their counterparts in the United States, where banks that serviced crypto customers have recently faced devastating collapses.
To avoid such catastrophic outcomes, the official emphasized the importance of upgrading regulation philosophy and capability.
Why Has the Official Asked Regulators to be Cautious?
Xuan Changneng, the deputy governor of the People’s Bank of China, delivered a speech at the Boao Forum on Friday, highlighting the potential dangers of financial innovation and cryptocurrencies.
Speaking to a global audience, he urged regulators to consider the risks and fraud associated with cryptocurrency, citing the experiences of American banks that failed after providing various crypto-related services, from deposit-taking to settlement.
In his remarks, the PBOC official emphasized the importance of respecting rules when coming up with regulations, and upgrading regulatory philosophy to ensure that financial innovation does not come at the cost of financial stability.
The risks associated with cryptocurrencies and other forms of digital assets must be carefully managed to prevent failures of banks and lenders. Doing so is the only way maintain the integrity of the financial system and pave the way for a prosperous future.
The official emphasized the importance of thoroughly evaluating new technologies and financial models before accepting or approving them.
This approach requires regulators to verify and confirm the efficacy of new technologies to avoid the risks and frauds that can lead to the failure of financial institutions.
At the same forum, China’s Vice Minister of Finance emphasized the need for active participation in international cooperation and coordination of standards.
According to him, China must be deeply involved in setting global standards to promote a stable and sustainable financial environment.
By taking a proactive approach to international cooperation, China can promote financial innovation while safeguarding against potential dangers associated with digital currencies and other factors.