Cryptocurrencies With Utility Will Have a Promising Future, Says a Report from Bank of China
“Those cryptocurrencies that have practical use cases and can serve as a means of exchange or payment will enjoy promising prospects.” says a report from the Institute of International Finance (IIF) of Bank of China.
Although the vice governor People’s Bank of China (PBoC) emphasized a reinforced crackdown on all types of virtual currencies this year on March 29, Bank of China, the country’s fourth-largest bank by assets, feels positive about some cryptocurrencies that offer utilities.
The “Global Banking Outlook Report” for Q2 2018 which was published on March 28, includes a special analysis of digital currency, focusing on the status quo and existing problems of the development of digital currency, related supervision practices by typical world and the development trend in the sector.
The Report states that in recent years, digital currencies represented by Bitcoin evolve rapidly, and their ability to speed up financial transactions and to reduce costs have gained worldwide attention. Meanwhile, various problems have emerged in the crypto maket, including the extreme fluctuation in pricing, anonymous trading as a vehicle for money laundering and other criminal activities, the lack of effective regulatory framework and an increasing number of cryptocurrency theft cases. Thus a global push is urgently needed to regulate cryptocurrency.
Considering that there is no regulation precedent in the emerging area of digital currency, the Report put forward three suggestions:
1. Strengthen the legislation to determine the nature of cryptocurrency ;
2. Give full play to the role of G20 in coordinating global policies, and exploring the establishment of a global unified regulatory framework of cryptocurrency. G20 members should urge all nations across the world to share crypto transaction information, continuously standardize the development of digital currency, and to jointly combat related crimes;
3. Actively participate in the global governance of digital currency.
In terms of the development trend, the Report believes that with a global push for cryptocurrency regulation, the state-backed digital currency and those that have use cases and can serve as a means of exchange or payment will enjoy promising prospects, while the ones that are used for speculation and hype will be severely cracked down by regulators.
It is worth noting that the Report hits Chinese authorities’ attitude in this space.
“ Although bitcoin and the like incur many problems and risks, no one can stifle innovation in this sector. Chinese authorities have stepped up scrutiny on crypto trading, but it does not mean that China will detach itself from the global financial innovation wave. The country has started earlier in researching a government regulated digital currency than most countries. In the future, China will take an active part in the global governance of digital currency, enhance its influence in the development of digital currency and win a big say in outlining regulatory rules.”