China's central bank vows to maintain tight cryptocurrency regulation

Out-Law News | 04 Aug 2021 | 3:27 am |

China’s central bank will maintain tight regulation of cryptocurrency activity, say reports after central bankers met to set a policy agenda for the remainder of 2021.

The bank will supervise financial platform companies to ensure they act in line with regulations, according to Bloomberg.

The central bank will seek to prevent major financial risks, to reduce the number of high-risk financial institutions in some provinces, and to speed the creation of a financial stability law proposed by the bank’s deputy governor Liu Guiping in March.

The bank claimed that its monetary policy would be flexible, targeted, reasonable and appropriate.

Leo Xin of Pinsent Masons, the law firm behind Out-Law, said:” According to our observation, banning cryptocurrency markets in China will help China’s central bank to smoothly promote its digital yuan plan and help preserve financial sovereignty. Furthermore, the digital yuan would become a key tool for RMB internationalization.”

In May, China banned financial institutions and payment companies from offering services related to cryptocurrency trading and warned investors not to get involved in cryptocurrency trading. China closed its local cryptocurrency exchanges in 2017.

China started to explore its own digital currency in 2014 by establishing the Digital Currency Research Institute in China’s central bank. Digital yuan is different from cryptocurrencies such as bitcoin, it falls under the authority of China’s central bank.