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Chinese central bank executive says: Cryptocurrency adoption is a “huge challenge”

According to a Chinese central bank executive, the increasing acceptance of cryptocurrencies such as Bitcoin (BTC) presents a serious threat to the existing banking system.

Wen Xinxiang’s Worry About Crypto

Wen Xinxiang is the director of the People’s Bank of China’s (PBoC) payment and settlement department. He has voiced worry about the rising popularity of cryptocurrencies and fiat pegged stablecoins.

According to the Shanghai Securities Journal, Chinese central bank executive Wen underlined serious dangers connected with the crypto market. This was during a payment and settlement event on Sept. 24, citing Bitcoin’s market value approaching $800 billion and the whole stablecoin market cap is topping $120 billion.

One of the key problems of crypto is that it can operate independently. Without depending on the existing payment system supported by commercial banks and payment organisations. Cryptocurrencies also pose problems for Chinese banks’ payment services, undermining clearing bodies’ influence.

Wen also stated that cryptocurrencies supposed secrecy made them an appealing tool for enabling criminal activities such as money laundering. Additionally, he called in for further steps to help the existing Chinese banking system compete with crypto.

Read More: Concerns about Bitcoin security still lingers among institutional investors.

Chinese Government’s Anti-Crypto Position

Wen’s comments confirm the Chinese government’s anti-crypto position, as the country has continued to crack down on crypto trade and mining this year, with local governments shutting down several mining farms and banning crypto trading operations.

In July, PBoC deputy governor Fan Yifei voiced worry about stablecoins, saying that the rate of change in the private payments system was “extremely frightening.” Despite the Chinese government’s reservations about stablecoins, some local players are still experimenting with decentralised stablecoins linked to the digital yuan, China’s central bank’s digital currency.

Read More: Amid China’s crackdown on cryptocurrency mining, hydropower stations are up for sale.

Crypto products and NFTs are unregulated and can be highly risky. There may be no regulatory recourse for any loss from such transactions. Crypto is not a legal tender and is subject to market risks. Readers are advised to seek expert advice and read offer document(s) along with related important literature on the subject carefully before making any kind of investment whatsoever. Crypto market predictions are speculative and any investment made shall be at the sole cost and risk of the readers.