Zhou Xiao Chuan, Governor of the people’s bank of China, recently acknowledged that development of blockchain might be technologically inevitable.
However, he clarifies that Chinese authorities are not rushing to issue a national digital currency. At the moment, Bitcoin is illegal as a payment method in China and countries like Kuwait. This is from remarks made to the China Daily.
The Governor expressed the official position saying:
“We do not currently recognize Bitcoin and other digital currencies as a tool like paper money, coins and credit cards for retail payments. The banking system does not accept it”
China has taken a tough stance on cryptocurrency as evidenced by the ban on Initial Coin Offerings (ICOs) since September 2017. The central bank has been actively monitoring the development of digital currency and distributed ledger technology.
The CEO and PBOC remains cautious adding that certain applications of the blockchain should be under regulatory oversight to prevent unintended consequences:
“If they [Blockchain technologies] 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”
Miaocai Network Uses Blockchain
That said, the Chinese government has adopted blockchain though in limited functions. The Miaocai network (A Chinese Taxation System) for example, adopted an internet based taxation and exchange system last year. Besides, China has also run simulations of a national digital currency to explore scenarios for its commercial banks.
China is emerging has always been tough on cryptocurrency. After all, One Party system is the epitome of centralization. Despite that tough stance, blockchain is a revolutionary form of private empowerment and authorities will be reluctant to allow its full optimization.
The significance of the admission though is noteworthy. Like any useful technology, its utility eventually becomes a necessity. There is reason to be optimistic about the future of cryptocurrency in China.