By Shelly Melancon (Switzerland)
A top executive from the People’s Bank of China (PBoC) has revealed that the apex bank is deeply concerned that cryptocurrencies, especially stablecoins, are huge risks to financial systems worldwide. Fan Yifei, a Deputy Governor of the apex bank, specifically mentioned the stablecoin tether (USDT) during this CNBC interview today.
Virtual Assets Vs Digital Yuan
He also said that the rate at which the private payment systems are quite frightening. Hence, the apex bank is putting up policies that would prevent random capital expansion and monopoly.
“… The so-called stablecoins pose inherent risks and challenges to global financial systems,” Yifei remarked. He also said that the Chinese authorities have already put in place policies that restrict the expansion of stablecoins in the country. He also emphasized that the central bank won’t hesitate to apply punitive policies on other firms in the payment solutions space as it did to Alibaba’s Ant group.
You’d recall that the authorities launched an antitrust probe into the eCommerce giants and stopped its $38 billion IPO. However, PBoC’s head of digital currency, Mu Changchun, opined that one purpose of China’s central bank digital currency (CBDC) is to support popular payment services such as WeChat pay and Alipay.
Yifei further revealed that, as of now, over 10 million people have participated in China’s private trial for the digital yuan. Yifei added, “we are paying attention to the possible effect of the digital yuan on the financial and settlement systems to ensure that it doesn’t weaken our monetary policies or cause financial disintegration.”
Yifei Slams Major Digital Currencies
While Yifei cautioned against global stablecoins, he also did the same with top digital currencies such as bitcoin. He opined that bitcoin and altcoins are now “speculation tools” which can threaten “social stability and financial security.”
China has been clamping down on crypto activities in recent months, especially bitcoin mining and digital currency trading. Many crypto enthusiasts believe that a clampdown on stablecoins will be China’s last stage of a crypto clampdown in the country before the public launch of its digital yuan. Hence, the bitcoin price may experience some temporary decline.
Chinese authorities saw bitcoin as a threat to the launch of its digital yuan. So, it banned its mining and caused a decline in its price. By contrast, Visa and other leading payment solution firms have shown more support for the crypto industry, including stablecoins.
The payment giants revealed in its official crypto update yesterday that stablecoins “would soon become an indispensable part of the evolution in the financial service system, and our company is happy to be part of this important process.”
During the first half of this year, when bitcoin attained new peaks, Visa’s crypto transactions grew in leaps and bounds. Visa revealed that customer transactions on crypto-linked cards exceeded $1.5 billion.
In late March, the payment giants announced that USD coin (USDC) is now part of its payment options. Even though the crypto market hasn’t yet attained its 2021 Q1 and Q2 performance because of tesla’s decision not to accept bitcoin payments, Visa hasn’t stopped supporting the emerging crypto ecosystem, which continues to grow at an alarming rate.
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