Cryptocurrencies not recognised as legal tender in Malaysia

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Cryptocurrency Not To Be Considered 'Legal Tender'; Centre To Treat It Like Stocks & Bonds

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Legal Tender? The Regulation of Cryptocurrencies

Cryptocurrencies will never become legal tender

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Demystifying Crypto: Digital Assets and the Role of Government

 

Cryptocurrencies not recognised as legal tender in Malaysia, says deputy minister

  

Useful assets:Although digital assets are not recognised as legal tender, Yamani added it still has many different usage including as a class asset that can be invested in

 

Cryptocurrencies are still not recognised as legal tender in Malaysia as they do not exhibit characteristics of universal money, says Deputy Finance Minister II Yamani Hafez Musa.

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Yamani said cryptocurrencies, also known as digital assets, are also not a payment instrument that is regulated by Bank Negara.
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“Digital assets such as bitcoin and Ethereum are not suitable to be used as a payment instrument as these assets do not exhibit characteristics of money.
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“In general, digital assets are not a store of value and a good medium of exchange.
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“This is due to the state of digital assets which is exposed to volatility as a result of speculative investments,” he said when replying to a question raised by Nurul Izzah Anwar (PH - Permatang Pauh) in Dewan Rakyat on Thursday (March 3).
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Nurul Izzah had asked about the government’s role in monitoring and regulating currency as well as cryptocurrency assets.
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She also asked if the government had any plans to create digital currency taking into account Bank Negara’s involvement in Project Dunbar for international money transfers using blockchain technology.
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In explaining the volatility of cryptocurrency, Yamani said bitcoin hit a peak of US$65,000 (RM272,382.50) in April 2021 but quickly saw a decline of 50% the following week.
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He also said cryptocurrency is exposed to the risk of theft in which statistics from 2011 to 2021 showed that digital assets worth US$12bil (RM50.29bil) have been stolen through cyberattacks and hacking.
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He added that bitcoin is also only able to process 10 transactions per second compared to 65,000 transactions per second on current payment systems such as Visa.
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“Also, what is important is the huge impact on the environment because the electrical power that is used to process one bitcoin transaction can process 1.2 milliob visa transactions.
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In 2020, the bitcoin network used 132 terra-watts per hour which is equivalent to the entire electricity consumption of Argentina,” he said.
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Yamani added that currently, Bank Negara has also not decided to issue a central bank digital currency (CBDC) as the country’s domestic payment systems including the Real-time Retail Payments Platform continues to operate safely and efficiently to support Malaysia’s economic needs and allows real-time digital payments.
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“Additionally, the monetary policy tools and existing finances also remain effective in maintaining monetary stability and the country’s finances,” he said.
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Although digital assets are not recognised as legal tender, Yamani added it still has many different usage including as a class asset that can be invested in.
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As such, he said the Securities Commission (SC) as the market regulator has set digital assets as a security under the law and is responsible to regulate its trading activities.- 

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 India and China come down hard due to concerns of financial market stability, illegal fundraising

N THE latest twist involving the world of cryptocurrencies, India’s government plans to impose a massive ban on the asset class.

Reports have indicated that the Indian government plans to pass a bill that would ban just about every activity involving cryptocurrencies, including the possession, issuance, mining, trading and the transferring of crypto-assets.

Once passed, this would make it one of the world’s strictest policies on cryptocurrencies. Government officials have said that the move is because they believe cryptocurrencies threaten the stability of financial markets, tend to fund unlawful activities and even resemble ponzi schemes.

The move by the Indian government falls in line with the school of thought that cryptocurrencies could increasingly suffer bans by governments around the world.

In India’s case, the move comes after an earlier ban two years ago. But last year, the courts in India overturned the decision, citing the ban as “disproportionate” after cryptocurrency exchanges filed a lawsuit against the central bank’s ban.

The strong stance against cryptocurrencies has also been shown by China’s government. More than three years ago, China was the first country to ban initial coin offerings (ICOs), calling it “illegal fundraising”.

Since then, the Chinese government has accelerated efforts to clamp down all businesses involved in cryptocurrency operations, including bitcoin miners.

China’s government says its stance is based on investor protection, money laundering concerns and the unnecessary consumption of energy due to crypto mining activities.

Last month alone, there were plans to ban new cryptocurrency mining projects and shut down existing ones in China’s Inner Mongolia region.

As one financial analyst puts it, “the problem with cryptocurrencies is that while it thrives to work in an unregulated world, it is bound to come under the scrutiny and regulation of governments, which are mostly afraid of its misuse and potential negative impact to financial markets. Perhaps somewhere in the future, a balance will be struck but that is anyone’s guess”.

While governments have a tendency to ban cryptocurrencies, many are embracing blockchain technology with the intention of issuing state-backed digital currencies.

This is essentially an electronic version of notes or coins which would replace physical cash entirely and dubbed central bank digital currencies or CBDC.

China is one of the leading countries for this and has already passed a law to legalise its own official digital currency. Similarly, India is an example of another country that is considering having its own digital currency. Interestingly, India’s move to pass the bill to ban cryptocurrencies comes soon after the mother of all cryptos, namely, bitcoin has hit its all-time high past US$60,000 (RM246,449) for the first time earlier this week.

The world’s biggest currency rally was driven by speculative demand, increased adoption by firms and institutional investors that see bitcoin as a store of value. Last month, Tesla bought over a billion dollars worth of bitcoins.

The electric car maker said it plans to accept the digital coin as payment for its products. Mastercard has also said it would also soon accept bitcoin as a form of payment.

Asset manager BlackRock and payment companies Paypal and Square have also recently backed cryptocurrencies.

Back home, the question remains whether the government, central bank or the Securities Commission (SC) would take a stronger stance against cryptocurrencies.

Malaysia’s regulators have held the view that digital assets are not legal tender and have warned investors to be cautious when dealing with cryptocurrencies.

SC chairman Datuk Syed Zaid Albar tells StarBizWeek that “investors must understand that unregulated, offshore investments are not protected under Malaysian securities law”.

“The SC has put in place a regulatory framework for such new emerging investment channels to provide certainty to issuers and investors who are keen to explore these new instruments.

“For example, our regulatory framework has tried to address issues such as putting investors’ money in trust accounts, accurate disclosures, cooling-off periods and conflict of interest situations are also regulated, ” Syed Zaid explains.

The country’s central bank, Bank Negara, also echoes a similar view, explaining that digital assets lack the characteristics of money and suffer from several limitations such as price volatility and risks of cyber threats.

“Digital asset activities are also subject to anti-money laundering and counter-terrorism financing regulations administered by the respective authorities, ” the central bank reported in its annual report in 2019.

Malaysia is also one of the countries studying the feasibility of issuing its own digital currency. “The bank is no exception, and we continue to engage closely in discussions surrounding CBDC with other central banks, ” it said.

More collaborations among central banks around the world are taking place to study the impact of a digital currency for financial stability and the monetary policy of a country.

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Google’s entire operation consumed 12.2 TWh in 2019 and all the datacentres in the world, excluding those that mine Bitcoin, jointly consume around 200 TWh annually. — Reuters

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China gets into blockchain race with US

Blockchain is perhaps best known for underpinning the operation of cryptocurrencies such as bitcoin, which Beijing may seek to replicate.PHOTO: REUTERS

One example of the potential application of blockchain technology is a newly launched app by the Communist Party that asks members to explain why they joined and what party loyalty means to them. (Photo: AFP/Greg Baker)

BEIJING: China has launched an ambitious effort to challenge the US dominance in blockchain technology, which it could use for everything from issuing digital money, to streamlining a raft of government services and tracking Communist Party loyalty.

The technology received a crucial endorsement from President Xi Jinping last week, a signal that the government sees blockchain as an integral part of the country's plan to become a high-tech superpower.

Beijing is the latest in a handful of countries to have adopted a law strictly governing the encryption of data - particularly blockchain technology, which allows the storage and direct exchange of data without going through an intermediary.

Reputedly unfalsifiable, blockchain is a database shared across a network of computers. Once a record has been added to the chain it is almost impossible to change.

It is perhaps best known for underpinning the operation of cryptocurrencies such as bitcoin - which Beijing may seek to replicate as it pushes ahead with its plans for a world-leading government-run digital currency.

Blockchain technology received a crucial endorsement from President Xi Jinping last week, a signal that the government sees it as an integral part of the country's plan to become a high-tech superpower. (Photo: AFP/Andrew Caballero-Reynolds)

Although the new law for blockchain "is still rather vague", the country is clearly one of the most active in terms of regulation, Stanislas Pogorzelski, editor of specialist site Cryptonaute.fr, told AFP.

"China has understood very well that to stay a superpower, you have to be at the forefront of new technologies," said Pogorzelski.

Blockchain is set to play a key role in many sectors in the future, including digital finance, internet of things, artificial intelligence and 5G.

LESS HUMAN INTERVENTION 

Bitcoin(FX:BTC/USD)Stock market insights from social media

Updated https://sentifi.com/currencies/bitcoin

It could also serve to make China's vast bureaucratic system more efficient.

The official Xinhua news agency said a blockchain-based system had been used for the first time to automatically generate and file an enforcement case in Chinese court against a party who failed to pay damages in a mediation agreement.

With less human intervention, such systems could make judicial enforcement in China "more intelligent and transparent," the agency said.

Chinese shares jumped this week as investors piled into stocks linked to blockchain, after Xi said China should step up research and development of the technology.

"Blockchain should play a bigger role in strengthening Chinese power in cyberspace, developing the digital economy and promoting socio-economic development," Xi said.

"The general sentiment of Xi's comments was simple," said Anthony Pompliano, who writes a daily cryptocurrency newsletter.

"Blockchain technology is really important for the future and China plans to be the global leader," Pompliano added.

LOYALTY TEST

According to analyst Kai von Carnap of the Mercator Institute for Chinese Studies, blockchain-backed tools have potential applications that go well beyond improving administrative efficiency in China.

"More interesting will be those targeting party discipline, internal stability and ideological loyalty," Von Carnap told AFP.

 

Chinese shares jumped this week as investors piled into stocks linked to blockchain, after Xi said China should step up research and development of the technology. (Photo: AFP/Hector Retamal)

One example is a newly launched app by the Communist Party that asks members to explain why they joined and what party loyalty means to them.

Blockchain technology is then used to store their responses on a permanent, widely distributed ledger - recording their thoughts in cyberspace forever.

"NOT A FAN"

As China trumpets its push for more blockchain technology, it is hoping to outpace trade-war rival the United States, whose President Donald Trump tweeted his disdain for cryptocurrencies in July.

"I am not a fan of Bitcoin and other Cryptocurrencies, which are not money, and whose value is highly volatile and based on thin air," he wrote.

The contrast between the world's two biggest economies is "striking", according to Pompliano, who says "bitcoin, blockchain technology, and digital assets are not a priority for America".

Facebook chief executive Mark Zuckerberg had to defend his plans to launch a digital coin called Libra to the US Congress in October, after it faced a torrent of criticism from all sides - including governments who see it as a threat to their monetary sovereignty.

"I don't think Libra will succeed," Huang Qifan, vice director of the CCIEE, an economic think-tank that advises Beijing, said this week in remarks widely reported by state media.

"It is better ... to have sovereign digital currencies issued by a government or a central bank," he said.

Last year China released a damning report on existing digital currencies, saying they were "increasingly used as a tool in criminal activities."

But while Beijing banned cryptocurrencies two years ago, it is fast-tracking preparations for its own state-run virtual currency, which is supposed to facilitate transactions and reduce costs.

The anonymity of cryptocurrencies allows users to buy and sell freely without leaving a digital trail - but China's mooted e-cash system will be tightly regulated, experts say, and run by the People's Bank of China.

Source: AFP/zl   Source link


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China gets into blockchain race with US

Blockchain is perhaps best known for underpinning the operation of cryptocurrencies such as bitcoin, which Beijing may seek to replicate.PHOTO: REUTERS

One example of the potential application of blockchain technology is a newly launched app by the Communist Party that asks members to explain why they joined and what party loyalty means to them. (Photo: AFP/Greg Baker)

BEIJING: China has launched an ambitious effort to challenge the US dominance in blockchain technology, which it could use for everything from issuing digital money, to streamlining a raft of government services and tracking Communist Party loyalty.

The technology received a crucial endorsement from President Xi Jinping last week, a signal that the government sees blockchain as an integral part of the country's plan to become a high-tech superpower.

Beijing is the latest in a handful of countries to have adopted a law strictly governing the encryption of data - particularly blockchain technology, which allows the storage and direct exchange of data without going through an intermediary.

Reputedly unfalsifiable, blockchain is a database shared across a network of computers. Once a record has been added to the chain it is almost impossible to change.

It is perhaps best known for underpinning the operation of cryptocurrencies such as bitcoin - which Beijing may seek to replicate as it pushes ahead with its plans for a world-leading government-run digital currency.

Blockchain technology received a crucial endorsement from President Xi Jinping last week, a signal that the government sees it as an integral part of the country's plan to become a high-tech superpower. (Photo: AFP/Andrew Caballero-Reynolds)

Although the new law for blockchain "is still rather vague", the country is clearly one of the most active in terms of regulation, Stanislas Pogorzelski, editor of specialist site Cryptonaute.fr, told AFP.

"China has understood very well that to stay a superpower, you have to be at the forefront of new technologies," said Pogorzelski.

Blockchain is set to play a key role in many sectors in the future, including digital finance, internet of things, artificial intelligence and 5G.

LESS HUMAN INTERVENTION 

Bitcoin(FX:BTC/USD)Stock market insights from social media

Updated https://sentifi.com/currencies/bitcoin

It could also serve to make China's vast bureaucratic system more efficient.

The official Xinhua news agency said a blockchain-based system had been used for the first time to automatically generate and file an enforcement case in Chinese court against a party who failed to pay damages in a mediation agreement.

With less human intervention, such systems could make judicial enforcement in China "more intelligent and transparent," the agency said.

Chinese shares jumped this week as investors piled into stocks linked to blockchain, after Xi said China should step up research and development of the technology.

"Blockchain should play a bigger role in strengthening Chinese power in cyberspace, developing the digital economy and promoting socio-economic development," Xi said.

"The general sentiment of Xi's comments was simple," said Anthony Pompliano, who writes a daily cryptocurrency newsletter.

"Blockchain technology is really important for the future and China plans to be the global leader," Pompliano added.

LOYALTY TEST

According to analyst Kai von Carnap of the Mercator Institute for Chinese Studies, blockchain-backed tools have potential applications that go well beyond improving administrative efficiency in China.

"More interesting will be those targeting party discipline, internal stability and ideological loyalty," Von Carnap told AFP.

 

Chinese shares jumped this week as investors piled into stocks linked to blockchain, after Xi said China should step up research and development of the technology. (Photo: AFP/Hector Retamal)

One example is a newly launched app by the Communist Party that asks members to explain why they joined and what party loyalty means to them.

Blockchain technology is then used to store their responses on a permanent, widely distributed ledger - recording their thoughts in cyberspace forever.

"NOT A FAN"

As China trumpets its push for more blockchain technology, it is hoping to outpace trade-war rival the United States, whose President Donald Trump tweeted his disdain for cryptocurrencies in July.

"I am not a fan of Bitcoin and other Cryptocurrencies, which are not money, and whose value is highly volatile and based on thin air," he wrote.

The contrast between the world's two biggest economies is "striking", according to Pompliano, who says "bitcoin, blockchain technology, and digital assets are not a priority for America".

Facebook chief executive Mark Zuckerberg had to defend his plans to launch a digital coin called Libra to the US Congress in October, after it faced a torrent of criticism from all sides - including governments who see it as a threat to their monetary sovereignty.

"I don't think Libra will succeed," Huang Qifan, vice director of the CCIEE, an economic think-tank that advises Beijing, said this week in remarks widely reported by state media.

"It is better ... to have sovereign digital currencies issued by a government or a central bank," he said.

Last year China released a damning report on existing digital currencies, saying they were "increasingly used as a tool in criminal activities."

But while Beijing banned cryptocurrencies two years ago, it is fast-tracking preparations for its own state-run virtual currency, which is supposed to facilitate transactions and reduce costs.

The anonymity of cryptocurrencies allows users to buy and sell freely without leaving a digital trail - but China's mooted e-cash system will be tightly regulated, experts say, and run by the People's Bank of China.

Source: AFP/zl   Source link



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Investors up in arms after fall of MBI | The Star Online

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Blockchain endorsement : Xi said China will increase investment in blockchain technology after chairing a study session last week on d.

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President Xi’s Blockchain Push Triggers Frenzy in China Technology Stocks

Blockchain endorsement: Xi said China will increase investment in blockchain technology after chairing a study session last week on developing the industry, state-owned Xinhua reported.— AP
 
https://youtu.be/hfNcct7ZfbE

https://youtu.be/KoDD2Yk0bjE

• Shenzhen tech index surges 5.3%, the most in eight months
• Investors urge companies to develop blockchain businesses

BEIJING: Chinese investors snapped up every blockchain-related stock in sight after President Xi Jinping said Beijing wants to speed up development of the technology.

The gains were widespread yesterday, with Insigma Technology Co and Sinodata Co among more than 60 tech shares surging by the daily limit in Shanghai and Shenzhen.

The excitement coincided with a 26% rally in Bitcoin, and also boosted stocks with more tenuous connections to blockchain, like baby-food producer Beingmate Co and selfie-app developer Meitu Inc.

Xi said China will increase investment in blockchain technology after chairing a study session last week on developing the industry, state-owned Xinhua reported late last Friday.

The market reaction shows how far an endorsement from Xi can go in China, where high-level officials yesterday began their first major policy meeting since early 2018.

“Most of these companies, especially those that are just beginning to state their connection with blockchain today, are trying to take advantage of the hype, ” said Li Shiyu, fund manager at Guangdong Xiaoyu Investment Management Co. “It shows how much excitement can be triggered by something stressed as a priority by the top man himself.”

The Shenzhen Information Technology Index closed 5.3% higher yesterday, its biggest advance in eight months.

Hundsun Technologies Inc, Easysight Supply Chain Management Co, YGSOFT Inc and dozens more companies with officially registered blockchain businesses rose by the 10% limit.

In Hong Kong, traders singled out Meitu due to its plans for an encrypted user-identification system.

The shares surged as much as 30%. Pantronics Holdings Ltd - which earlier this month said it will change its name to “Huobi Technology”, a reference to a digital currency exchange - rallied as much as 67%.

American depositary receipts of Chinese blockchain companies also surged last Friday.

Investors pressured other firms to jump on the blockchain hype, using an online Q&A platform to submit thousands of questions on their plans to use the technology.

“Please proactively make expansion plans in blockchain to jump on state policies - doing so would be the best reward to investors, ” urged one shareholder of development-store operator Hunan Friendship & Apollo Commercial Co. — Bloomberg

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President Xi’s Blockchain Push Triggers Frenzy in China Technology Stocks

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https://youtu.be/hfNcct7ZfbE

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• Shenzhen tech index surges 5.3%, the most in eight months
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BEIJING: Chinese investors snapped up every blockchain-related stock in sight after President Xi Jinping said Beijing wants to speed up development of the technology.

The gains were widespread yesterday, with Insigma Technology Co and Sinodata Co among more than 60 tech shares surging by the daily limit in Shanghai and Shenzhen.

The excitement coincided with a 26% rally in Bitcoin, and also boosted stocks with more tenuous connections to blockchain, like baby-food producer Beingmate Co and selfie-app developer Meitu Inc.

Xi said China will increase investment in blockchain technology after chairing a study session last week on developing the industry, state-owned Xinhua reported late last Friday.

The market reaction shows how far an endorsement from Xi can go in China, where high-level officials yesterday began their first major policy meeting since early 2018.

“Most of these companies, especially those that are just beginning to state their connection with blockchain today, are trying to take advantage of the hype, ” said Li Shiyu, fund manager at Guangdong Xiaoyu Investment Management Co. “It shows how much excitement can be triggered by something stressed as a priority by the top man himself.”

The Shenzhen Information Technology Index closed 5.3% higher yesterday, its biggest advance in eight months.

Hundsun Technologies Inc, Easysight Supply Chain Management Co, YGSOFT Inc and dozens more companies with officially registered blockchain businesses rose by the 10% limit.

In Hong Kong, traders singled out Meitu due to its plans for an encrypted user-identification system.

The shares surged as much as 30%. Pantronics Holdings Ltd - which earlier this month said it will change its name to “Huobi Technology”, a reference to a digital currency exchange - rallied as much as 67%.

American depositary receipts of Chinese blockchain companies also surged last Friday.

Investors pressured other firms to jump on the blockchain hype, using an online Q&A platform to submit thousands of questions on their plans to use the technology.

“Please proactively make expansion plans in blockchain to jump on state policies - doing so would be the best reward to investors, ” urged one shareholder of development-store operator Hunan Friendship & Apollo Commercial Co. — Bloomberg

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China's central bank speeds up digital currency drive

 Private-sector players likely to participate in project

Photo: VCG

With internet technologies advancing and cryptocurrencies flourishing amid a broad digital transformation, individual countries are starting to issue legal tender in digital form, and the People's Bank of China (PBC), the country's central bank, is also accelerating its pace in this area.

As of Sunday, the PBC had applied for 74 patents involved with digital currencies to the National Intellectual Property Administration, according to a report by the Economic Information Daily on Monday.

The PBC said it will speed up the development of legal digital currency on Friday.

Wang Xin, director of the PBC Research Bureau, said in July that the authority is organizing market-oriented institutions to jointly research and develop a central bank digital currency and the program has been approved by the State Council, China's Cabinet.

"China is beefing up efforts in digital currency innovation, a trend driven by emerging technologies that is spreading worldwide," said Huang Zhen, a professor at the Central University of Finance and Economics.

Rather than letting cryptocurrencies challenge the position of sovereign currencies, it is wiser for countries to roll out their own digital currencies, Huang told the Global Times on Monday.

Chinese authorities ordered a ban on initial coin offerings in 2017 and stopped direct bitcoin-yuan trading as the rapidly expanding market spawned concerns over financial risks.

The PBC, one of the earliest central banks in the world to start the process of digital currency innovation, launched its program in 2014 during the tenure of former governor Zhou Xiaochuan. In 2017, the PBC established a research institution for the digital currency.

"China is among the leading countries in terms of its research into a government-backed currency," said Huang.

Favorable conditions

The basic conditions favorable for China's implementation of a digital currency include comprehensive and fast networks, broad digitalization in the financial sector, and advanced financial technologies - particularly blockchain, a digital, public ledger that records online transactions, according to Huang.

In recent years, Chinese internet companies have made huge achievements in the mobile payment and e-commerce sectors, helping create a digital economy of more than 30 trillion yuan ($4.36 trillion), according to media reports.

In June, US social media giant Facebook released an official white paper for its cryptocurrency project Libra, a blockchain-powered stablecoin expected to arrive in 2020.

The move stepped up the global race for digital currencies, with China's central bank paying close attention.

The central bank is closely working with market participants on creating a central bank digital currency, PBC official Wang said.

"China's private market players have accumulated some experience in the digital currency sector. Their participation in the government's work will effectively help promote the project," Cao Yin, an expert in the blockchain sector, told the Global Times on Monday.

It is likely that the sovereign digital currency will be issued within two or three years at the soonest, although the authority tends to take a prudent attitude, Cao said.

Once it is broadly implemented, the new currency will have a big impact on Alibaba's Alipay and Tencent's WeChat Pay, the two dominant mobile digital payment tools in China, as the PBC's digital currency is featured by decentralization, unlike the former two.

Challenges ahead

There are still some bumps on the road to promoting the digital currency.

"For this new kind of currency, its nature actually poses challenges to existing policies in such aspects as foreign exchange control, so it takes time to balance benefits with potential risks," said Cao.

A flexible and open mechanism is needed by the PBC to attract more talent, he added.

Digital currencies can help strengthen regulation as transaction data can be tracked and analyzed, including illegal money laundering, according to Huang. But laws and rules should be formulated in a timely fashion to protect individual information. "Safety is the biggest issue," he added.

"Use of the digital currency to better serve the real economy also requires policy guidance," said Huang. Newspaper headline: PBC accelerates digital currency drive.

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China's central bank speeds up digital currency drive

 Private-sector players likely to participate in project

Photo: VCG

With internet technologies advancing and cryptocurrencies flourishing amid a broad digital transformation, individual countries are starting to issue legal tender in digital form, and the People's Bank of China (PBC), the country's central bank, is also accelerating its pace in this area.

As of Sunday, the PBC had applied for 74 patents involved with digital currencies to the National Intellectual Property Administration, according to a report by the Economic Information Daily on Monday.

The PBC said it will speed up the development of legal digital currency on Friday.

Wang Xin, director of the PBC Research Bureau, said in July that the authority is organizing market-oriented institutions to jointly research and develop a central bank digital currency and the program has been approved by the State Council, China's Cabinet.

"China is beefing up efforts in digital currency innovation, a trend driven by emerging technologies that is spreading worldwide," said Huang Zhen, a professor at the Central University of Finance and Economics.

Rather than letting cryptocurrencies challenge the position of sovereign currencies, it is wiser for countries to roll out their own digital currencies, Huang told the Global Times on Monday.

Chinese authorities ordered a ban on initial coin offerings in 2017 and stopped direct bitcoin-yuan trading as the rapidly expanding market spawned concerns over financial risks.

The PBC, one of the earliest central banks in the world to start the process of digital currency innovation, launched its program in 2014 during the tenure of former governor Zhou Xiaochuan. In 2017, the PBC established a research institution for the digital currency.

"China is among the leading countries in terms of its research into a government-backed currency," said Huang.

Favorable conditions

The basic conditions favorable for China's implementation of a digital currency include comprehensive and fast networks, broad digitalization in the financial sector, and advanced financial technologies - particularly blockchain, a digital, public ledger that records online transactions, according to Huang.

In recent years, Chinese internet companies have made huge achievements in the mobile payment and e-commerce sectors, helping create a digital economy of more than 30 trillion yuan ($4.36 trillion), according to media reports.

In June, US social media giant Facebook released an official white paper for its cryptocurrency project Libra, a blockchain-powered stablecoin expected to arrive in 2020.

The move stepped up the global race for digital currencies, with China's central bank paying close attention.

The central bank is closely working with market participants on creating a central bank digital currency, PBC official Wang said.

"China's private market players have accumulated some experience in the digital currency sector. Their participation in the government's work will effectively help promote the project," Cao Yin, an expert in the blockchain sector, told the Global Times on Monday.

It is likely that the sovereign digital currency will be issued within two or three years at the soonest, although the authority tends to take a prudent attitude, Cao said.

Once it is broadly implemented, the new currency will have a big impact on Alibaba's Alipay and Tencent's WeChat Pay, the two dominant mobile digital payment tools in China, as the PBC's digital currency is featured by decentralization, unlike the former two.

Challenges ahead

There are still some bumps on the road to promoting the digital currency.

"For this new kind of currency, its nature actually poses challenges to existing policies in such aspects as foreign exchange control, so it takes time to balance benefits with potential risks," said Cao.

A flexible and open mechanism is needed by the PBC to attract more talent, he added.

Digital currencies can help strengthen regulation as transaction data can be tracked and analyzed, including illegal money laundering, according to Huang. But laws and rules should be formulated in a timely fashion to protect individual information. "Safety is the biggest issue," he added.

"Use of the digital currency to better serve the real economy also requires policy guidance," said Huang. Newspaper headline: PBC accelerates digital currency drive.

 Source link

RELATED ARTICLES:

• Libra is unlikely to become a real currency as negatives outnumber positives
• Despite pushbacks, Facebook clings to Libra
• China cannot be absent from the era of global digital currency competition

Shenzhen takes lead in cryptocurrency

in China to launch a national digital currency, following the central government's plan to work...
Source: Global Times | Author: Li Xuanmin and Shen Weiduo in Shenzhen | Column: Economy

Shenzhen to head research into national digital currency

: 3pxFile photo: ICpResearch into a national digital currency, as mentioned in a central government...
Source: Global Times | Author: Zhang Hongpei | Column: Economy

Related posts:

BLOCKCHAIN beyond Bitcoin

 

What is Blockchain Technology, its uses and applications?

 

SC to regulate digital assets

 

Facebook delves into Cryptocurrency, the Libra coin plan

Cryptocurrency and Facebook logo are seen together in this photo. Photo: IC 

Video: 

https://youtu.be/eAPLA4oy7Ks