The next step in the development of cryptocurrency: regulation

Yesterday's sweep of digital currencies directly led to the major financial systems around the world starting to conduct self-examination, and there is a fear that similar incidents will occur again and affect people's livelihood.

Li Bo, deputy governor of the People's Bank of China, pointed out at the Digital Payment and Digital Currency Sub-Forum of the Boao Forum for Asia 2021 Annual Meeting that they are studying regulatory rules for Bitcoin and stablecoins. In the future, if any stablecoin hopes to become a widely used payment tool, it must be subject to strict supervision, just like banks or quasi-bank financial institutions.

When talking about the progress of the widely-watched digital RMB (6.5248, 0.0042, 0.06%), Li Bo responded that there is no specific timetable for the official launch of the digital RMB. In the future, China will continue to do a good job in pilot work, expand the scope of the pilot, build a digital RMB ecosystem, improve system security and reliability, and formulate corresponding laws and regulatory systems.

Talking about the issue of RMB internationalization, Li Bo pointed out, "We have said many times that this is a natural process. Our goal is not to replace the US dollar or other international currencies, but to let the market make choices and achieve further facilitation of international trade and investment."

When talking about the regulation of cryptocurrencies, Li Bo responded that it is necessary to ensure that speculation on such assets does not cause serious financial risks. Li Bo said that crypto assets are investment options, they are not currencies themselves, but alternative investments. Therefore, we believe that crypto assets should play a role in the future as an investment tool or alternative investment.

If it is used as an investment tool, many countries including China are also studying what kind of regulatory environment should be in place for such an investment method. Although this regulatory rule is the lowest regulatory rule, there must still be regulatory rules.

In addition, when talking about Bitcoin, Zhou Xiaochuan, former governor of the central bank, said that both digital currency and digital assets must serve the real economy. What are the benefits of digital assets to the real economy? Now everyone is cautious about this issue. "We have experienced the global financial crisis in 2008 and found that finance has been separated from the real economy. For example, shadow banking and derivatives have become purely speculative transactions between financial institutions. They are no longer connected to the real economy, so it is easy to go wrong. As a result, some leaders and traders of some international banks cannot understand it and it is difficult to do a good job of internal control. Zhou Xiaochuan said that it is necessary to distinguish between digital currency and digital assets. For digital assets such as Bitcoin, it is not time to draw conclusions now, but "it is necessary to remind and be careful". In China, financial innovations must clearly state their benefits to the real economy."