Central Bank of China governor rejects bitcoin as legitimate payment method
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China does not recognize bitcoin and other digital currencies as legitimate forms of payment, the central bank governor, Zhou Xiaochuan, said on Friday.
“We do not currently recognize bitcoin and other digital currencies as a tool like paper money, coins and credit cards for retail payments,” Zhou said on the sidelines of the annual parliament session. “The banking system does not accept it.”
China has taken a string of steps in recent months to clamp down on the cryptocurrency market, including closing exchanges and banning so-called initial coin offerings (ICOs) — digital, token-based fundraising rounds.
Zhou’s remarks added to pressure on bitcoin after the US on Thursday said “potentially unlawful” online trading platforms for cryptocurrencies, may be giving investors an unearned sense of safety and should be registered with the regulator.
Zhou said China paid close attention to the blockchain and distributed ledger technologies that bitcoin is built on, but that some applications of the technology had grown too quickly.
“If they spread too rapidly, it may have a big negative impact on consumers. It could also have some unpredictable effects on financial stability and monetary policy transmission,” said Zhou.
Questions & Answers
Q.What is the Central Bank of China's official stance on digital currencies like bitcoin?
What is the Central Bank of China's official stance on digital currencies like bitcoin?
The Central Bank of China does not recognise bitcoin or other digital currencies as legitimate payment methods. Governor Zhou Xiaochuan stated they are not viewed as tools for retail payments, like paper money or credit cards.
Q.What actions has China taken recently regarding the cryptocurrency market?
What actions has China taken recently regarding the cryptocurrency market?
China has clamped down on the cryptocurrency market by closing exchanges and banning initial coin offerings (ICOs). These steps aim to manage the spread of digital, token-based fundraising.
Q.Does China dismiss the underlying technology of cryptocurrencies entirely?
Does China dismiss the underlying technology of cryptocurrencies entirely?
No, China pays close attention to blockchain and distributed ledger technologies. However, Governor Zhou Xiaochuan expressed concern that some applications of this technology have grown too rapidly.
Q.Why is China concerned about the rapid growth of these new technologies?
Why is China concerned about the rapid growth of these new technologies?
Zhou Xiaochuan fears that rapid spread could negatively impact consumers, financial stability, and monetary policy transmission. Unpredictable effects from fast growth are a key concern for the central bank.