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China Still Considers Bitcoin Unlawful, But Proclaims Digital Currency is ‘Inevitable’

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People’s Bank of China (PBoC), otherwise known as the central bank of China, has come forward with new statements on bitcoin and digital currencies. According to PBoC’s governor, Zhou Xiaochuan, China is standing firmly on its decision to disallow bitcoin as a payment method.

“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,” said Zhou in the annual parliament session.

Zhou reportedly explained that the bank “must prevent substantial and irreparable damages” to the local economy. In this case, the volatile trends in bitcoin may seem detrimental for the country’s financial system. However, Zhou understands that evolution of digital currencies is “technologically inevitable”, and that the future holds more promises for it rather than cash.

Talking about blockchain, he said, “If they 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.”

Last week, Chinese regulators forced the social media accounts of cryptocurrency exchanges to close after they found out that some of them were still operating and entertaining Chinese customers. People are also trying to use VPN to access cryptocurrency websites banned in the country – which is why a spokesperson from Chinese internet financial regulation agency reportedly said, “The moment financial fraud is reported, the person in charge should be immediately arrested, no matter if it is domestic or foreign, all should be regulated. We are urging all relevant departments to further block the IP addresses of overseas cryptocurrency exchange platforms.”

While China has been banning cryptocurrencies and ICOs, it has time and again drawn attention to the importance of further development in blockchain technology. Director of CSRC (China Securities Regulatory Commission), Zhang Ye, explained in the “Two Sessions” event that the government needs to understand and get involved in the distributed ledger technology. But he also went on to say that decentralized blockchain needs to find a reference point, “Admittedly, some application scenarios need to be decentralized, but whether all scenarios need to be decentralized requires careful consideration.”

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