Do Not “Mythologize” Blockchain, Chinese Regulator Urges

 In Exchanges, Governments and Regulations

A top regulator from China said that people’s shouldn’t “mythologize” the blockchain technology even though it had great potential in a variety of industries.

A representative of the China Banking and Insurance Regulatory Commission (CBRC) insisted that blockchain technology should not be “mythologized” despite the fact that it had great potential. Fan Wenzhong, who leads the international department of the CBRC, admitted that distributed ledger technology (DLT) had innovative aspects, but that we shouldn’t go crazy about that.

On Sunday, Wenzhong gave a speech at the 5th Fintech Bund Summit in Shanghai, stating:

“We all think blockchain is an innovation with significant meaning – correct. But we shouldn’t mythologize blockchain.”

Also, he stressed that it was not that fair to label blockchain as a revolutionary technology given that the basic principles behind it are several centuries old.

“Decentralisation is not a new trend but a loop, because the earliest human transactions were without central authorities,” Wenzhong added.

Even though China has voiced its intention to become a leader in implementing blockchain, it is not supporting its most popular use case, that is, cryptocurrencies. Beijing thinks that digital currencies can undermine financial stability, which is why it banned initial coin offerings (ICOs) and local and even international crypto exchanges. The government went even further and showed its readiness to crack down on crypto mining activities inside its borders.

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Wenzhong’s statements were in line with the government’s stance.

“Blockchain is a useful innovation, but that doesn’t mean cryptocurrencies, which blockchain has given rise to, are necessarily useful,” he noted, demonstrating his disagreement with illegal fundraising operations that are promoted as blockchain projects.

The state media agency Xinhua, citing China’s central bank, stated that the Chinese government had halted domestic access to 88 foreign cryptocurrency exchanges and 85 ICOs. As a result, the share of Yuan in Bitcoin transactions has drastically declined. The use of Yuan fell from 90% before the ban to the current level of less than 1%. The government considers this a success and doesn’t plan to lift the ban on cryptocurrencies any time soon.

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