Chinese Gov’t: Forex Reforms Will “Deal With Cryptocurrency”

The Chinese gov’t is in the crypto news today for hinting that the treatment of cryptocurrencies such as Bitcoin (BTC) may change again as it looks to reform its forex markets. Reuters reported on December 24, citing a senior government and showing that a new research initiative will accompany the expansion of Beijing’s blockchain cross-border financing pilot platform.

Speaking of, the platform was launched in March this year and is right now running as a pilot scheme in 19 provinces. According to the deputy head of the State Administration of Foreign Exchange Lu Lei:

“We will gradually expand the scope of the pilot and the application scenarios of blockchain technology in cross-border financing and macro prudential management.”

He continued talking about the Chinese gov’t and its initiatives to navigate foreign exchange reforms to the world of cryptocurrency and the legislation around it, stating:

“At the same time, (the government) will push forward a prospective study on foreign exchange reforms to deal with cryptocurrency and explore the construction of the foreign exchange regulation and technology system under the new situation.”

The comments are conspicuous and are coming in the midst of a new regulation. As the Chinese gov’t prepares to launch its Central Bank Digital Currency (CBDC), a recent comment by the central bank stressed that this currency will not have the characteristics of Bitcoin. According to Mu Changchun who is the deputy director of the People’s Bank of China (PBoC):

“The currency is not for speculation. It is different to bitcoin or stable tokens, which can be used for speculation or require the support of a basket of currencies.”

The activities such as exchange and ones involving non-state controlled cryptocurrencies will remain all but banned under a policy which was enacted in September 2017. Lu did not state how the results of the new reforms would impact the status quo.

When it comes to blockchain, we could see news about China issuing bonds on blockchain and many other interesting initiatives. So, the authorities in China remain committed to the technology as well as its propagation and expansion of use cases. One of the most recent is specifically this technology for bond issuance.