China’s cryptocurrency onslaught isn’t going to be limited to Bitcoin mining — stablecoins, software, and influencers are all on the table and have been identified as a serious threat by authorities in the country.
“Some commercial organizations’ so-called stablecoins, especially global stablecoins, may bring risks and challenges to the international monetary system, payments and settlement system, etc.” On July 8, Fan Yifei, a deputy governor of China’s People’s Bank, told the reporters.
The crackdown on cryptocurrencies is regarded as a measure to limit one of the possible causes of volatility as China’s financial stability is called into question. The People’s Bank of China isn’t the only central bank that is skeptical about digital currency.
The Reserve Bank of India (RBI), the US Treasury, the Reserve Bank of South Africa, and others have all issued warnings to citizens about the dangers of cryptocurrencies. Stablecoins aren’t like other cryptocurrencies in that their worth isn’t based on the number of transactions that have been confirmed. External references are what give them their worth. It might be money, such as the US dollar, or a commodity.
Nevertheless, due to the fact that cryptocurrencies are in their infancy, there is a lack of accountability. Tether, which is dependent on the dollar, has indeed been criticized for not having enough money to back up its claims. It has also been accused of attempting to manipulate the value of Bitcoin. If enough individuals embrace global stablecoins, they would not only have an effect on the economy, but they will also have the potential to influence a country’s monetary policy.
Regulators recently ordered Beijing Qudao Cultural Development to close its doors because of accusations of crypto exchanges. The decision is being seen as a warning to other Chinese firms not to engage in cryptocurrency trading or provide other cryptocurrency-related services. Last month, crypto influencers’ Weibo accounts were also deactivated for breaking the platform’s rules and China’s regulations. The move was essential, according to the People’s Bank of China, to “prevent and control the risk of speculation in virtual currency transactions.”
All of this has been going on since China announced a national-level demand to stop Bitcoin mining and transactions in late May. Bitcoin’s hash rate — how quickly transactions are verified — has been falling as miners strive to find other countries to start-up operations, despite the nation accounting for more than half of global mining traffic. Investors and crypto players alike are now watching with eager anticipation to see what the Asian giant’s regulators will do in the future.