Stablecoins have been attracting increasing attention lately as banks and institutions explore its growing role in digital finance. However, despite its rapid innovation and increased adoption, some officials believe that it is in its early stages and the risks remain.
China’s Central Bank Urges Caution
Pan Gongsheng, Governor of the People’s Bank of China, recently spoke about the fast-changing world of digital finance. He noted that virtual currencies, especially stablecoins issued by institutions, have seen a surge in growth over the past few years.
However, he pointed out that the industry is still in its early stages.
Global financial bodies regulators are also growing increasingly cautious about the rise of stablecoins, citing concerns over how these digital assets could impact financial stability.
Global Regulators Sound the Alarm
Just ten days ago, during the IMF and World Bank Annual Meetings in Washington, D.C., finance ministers and central bank governors discussed stablecoin and their potential risks as one of the main topics. They noted that while stablecoins are growing popular, they still fall short of basic financial standards like the customer identification and anti-money laundering measures.
Officials warn that these very gaps could make it easier for money-laundering, illegal cross-border transfers and even terrorist financing to occur. This has led to increased market speculation, adding pressure to the global financial system and concerns that it could even threaten the monetary independence of smaller, less-developed economies.
These issues highlight the need for stronger oversight measures, before stablecoins can safely play a larger role in the financial system.
China’s Crackdown and Continued Oversight
The governor has stressed that since 2017, the People’s Bank of China (PBOC), together with other departments, has introduced several policies in an effort to prevent the risks of virtual currency trading speculations. He also notes that these measures are still in effect.
Looking ahead, the PBOC will keep working with the law enforcement agencies to crack down on illegal crypto activities and trading speculation in China. At the same time, the central bank will also closely monitor the growth of overseas stablecoins.
Ant Group’s Push into Digital Assets
This comes as Ant Group, Alibaba’s fintech arm, filed a trademark for “AntCoin” in Hong Kong, hinting at its growing interest in Web3 and digital assets. The trademark covers a wide range of financial operations from banking, lending, foreign exchange to blockchain settlement, digital-asset custody, stablecoin issuance, and even loyalty rewards.
It has previously faced pushback as the Chinese authorities ordered the company to halt its plans over concerns that privately issued tokens could weaken the central bank’s monetary control.
However, its latest move shows that it is moving forward despite Beijing maintaining a tight grip on crypto activity.
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FAQs
China’s central bank says stablecoins are still in early stages and could pose financial risks without stronger oversight.
Global officials worry stablecoins may enable money laundering, cross-border risks, and threaten smaller nations’ monetary control.
Since 2017, China has banned crypto trading and continues cracking down on illegal transactions and speculative activities.
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