China’s central bank, the People’s Bank of China (PBC), has intensified its scrutiny of crypto assets in its Financial Stability Report 2023.
Key Takeaways
- The People’s Bank of China highlights the exponential growth of the global crypto market in its Financial Stability Report 2023.
- The report emphasizes the necessity of consistent oversight, calling for a unified global approach to regulate the crypto sector.
- Concerns are raised about insider control, asset concealment, and data security associated with crypto assets, leading to a six-pronged strategy to secure the DeFi ecosystem.
- The report advocates for urgent regulatory restructuring, citing recent incidents like the FTX collapse and fraudulent activities in the DeFi sphere, and stresses the importance of international cooperation to manage cross-border characteristics and cyber threats.
China’s Urges Global Crypto Oversight
In its latest Financial Stability Report 2023, the People’s Bank of China (PBC) has heightened its focus on crypto assets, acknowledging their exponential growth on a global scale.
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The report emphasizes the critical need for consistent oversight, aligning with the principle of “same business, same risks, same supervision” to bridge regulatory gaps and prevent fragmented oversight.
Call for International Cooperation
The PBC report urges international collaboration in regulating framework for crypto assets, advocating for a unified global approach to supervise this burgeoning sector. It points to France’s recognition of crypto asset risks as reinforcement for stronger international coordination in regulatory matters.
Concerns and Comprehensive Strategy
However, the report raises concerns about issues such as insider control, asset concealment, and the security of blockchain-off-chain data associated with crypto assets.
Despite their limited integration with traditional financial systems, the increasing volatility and speculative nature of these assets have raised alarms since 2022.
To address these challenges, the report outlines a comprehensive six-pronged strategy. This strategy encompasses access, internal control, operational aspects, governance, exit strategies, and enhanced supervision, with a particular focus on scrutinizing the governance models adopted by decentralized finance (DeFi).
To Conclude
The People’s Bank of China’s comprehensive Financial Stability Report 2023 underscores a strict regulatory stance on crypto assets.
It prioritizes international cooperation and a restructured regulatory framework to address risks effectively and safeguard the stability of the global financial ecosystem.
