In a recent interview with the state-owned media outlet People.com, Liu Xiaolei, director of Peking University’s Guanghua Blockchain Lab offered her views on blockchain development and cryptocurrency regulation.

Below are excerpts from this interview:

What’s your opinion on the bubble in the blockchain industry?

Liu: In general, an emerging technology will undergo 5 stages from inception to maturity: inception, bubble, bubble burst, development and maturity. Since the emergence of a new technology, it has gradually attracted the mass’s attention.Following that, when the speed of technology development fails to meet people’s expectation, a bubble appears. Until the bubble pops up, the technology will become mature.  Like the internet, blockchain technology will also experience these 5stages. But it is expected to have a bright future.

What are obstacles to mass adoption of blockchain technology?

Liu: Although the adverse effect of current blockchain projects are associated with the issuance of tokens and speculation, we should separate tokens from ICOs, and not demonize tokens.Instead, the token mechanism contributes to the smooth operation of blockchain projects, and facilitates blockhain adoption to some degree. In order to prevent the mass from falling prey to the illegal fundraising, regulators should put a lid on those ICO fundraising activities that target at the general population.However, we could consider promoting the development of token-based blockchain projects under enhanced supervision.

Is there any other blockchain’s bottleneck?

Liu: Blockchain is not a universal panacea. This technology alone cannot solve all problems.On the one hand, blockchain is still in its fledgling stages of development, and there’s still a long way to go; On the other hand, blockchain is not an isolated solution. To solve pain points of some industries, it needs to combine with other cutting-edge technologies like artificial intelligence (AI).  Blockchain’s development relies on technological innovations in various fields, including laws,regulations and social systems.

What are your thoughts on cryptocurrency regulation?

Liu: Now, cryptocurrency exchanges are somewhat similar to the stock market in the U.S. before the establishment of U.S. Securities and Exchange Commission(SEC). Both of the two markets resembles a chaos, market manipulation and insider trading occurs frequently.  Useless tokens issued by ICO projects are also akin to the shares offered by fake companies through IPO during that period in the U.S.. It’s imperative to enhance cryptocurrency regulation.

At present, some countries are exploring good regulatory practices, for example, US stock market giant Nasdaq is open to becoming a platform for trading cryptocurrencies. I think Chinese regulators can discuss the possibility of launching a digital assets exchange, at least to promote China’s global competitiveness in this area. In view of the previous ICO madness, we should remain wary in the process of accelerating blockchain adoption. On the other hand, authorities should expand investor education, or set investment thresholds to avoid hype and speculation, if possible.