A Chinese executive has warned that the rapid adoption of cryptocurrency like Bitcoin (BTC), poses a significant challenge to the traditional financial system.
Wen Xinxiang is the director of the People’s Bank of China’s payment and settlement division. He expressed concern about the rise in popularity of cryptocurrencies as well as fiat-pegged stablecoins.
Wen spoke out about Bitcoin’s current market value exceeding $800 billion and its total stablecoin market capital exceeding $120 billion at a payment settlement forum held on September 24, according to The Shanghai Securities Journal.
According to the official, crypto has the unique challenge of being able to operate independently from traditional payment systems supported by commercial banks or payment institutions. Wen noted that cryptocurrencies can also pose problems for banks’ payment services, which could weaken the power of clearing organisations.
Wen also claimed that cryptocurrencies’ anonymity makes them attractive for illegal transactions such as money laundering. Wen urged for stronger measures to ensure traditional financial systems can compete with crypto.
The challenge of virtual currency is enormous. The traditional financial system can also use traditional methods like law and supervision to respond to competition from big tech companies in the financial sector. This will increase anti-monopoly efforts as well as strengthen information privacy.
Related: China’s new decentralized stablecoin targets international trade
Wen’s comments further confirm the anti-cryptostance of China’s government. China continues to crackdown on crypto trading, mining, and trading this year with multiple mining farms being shut down by local authorities and crypto trading transactions suspended.
Fan Yifei, the deputy governor of the PBoC, previously voiced concerns about stablecoins in July. He stated that the rapid development in private payments systems was “very alarming”. Some local players are now experimenting with decentralized stabilizecoins tied to China’s digital currency, called the digital yuan.
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