China’s Central Bank Issues Warning Against Blockchain Investment ‘Bubble’

China’s central bank, the People’s Bank of China (PBoC), has warned of “bubbles” at blockchain-related financing and investment, Reuters reported Nov. 6. The PBoC, that is famous for its anti-cryptocurrency posture, has reportedly advised that the government strengthen its supervision of “speculation, market manipulation and other irregularities,” that it claims are common in national blockchain investment and funding schemes.Local Chinese news outlets also have shown further details in the lender ’s newest warning, that was reportedly issued in the kind of PBoC working paper Nov. 6, entitled “Everything Can Blockchain Do and What’s it Not? ” According to think tank China Financial Forty Forum, the paper has been authored by Xu Zhong, director of the Research Bureau of the PBoC, and states :“There are not many blockchain jobs that really land and create societal advantages. Along with blockchains’ low functionality, the consequences of blockchain economic functions are also important reasons. It should be based on continuous research and experimentation. Rationally objectively assess exactly what the blockchain can and cannot do. “Local fiscal news source Forex East Money has further outlined that the paper entails an economic evaluation of the “tokenization” paradigm embraced by “mainstream” blockchain jobs, and clarifies technological principles like consensus mechanisms, smart contracts, and token uses within blockchain ecosystems. Forex East Money noted that the financial institution has additionally analyzed security and performance facets of blockchain systems, finishing with an analysis of this technologies ’s advantages and also limitations.As reported yesterday, the PBoC has recently widened its scrutiny to add token airdrops, which it characterized as “masked ” Initial Coin Offerings (ICOs), the latter of which have been subject to an outright ban in China as of September 2017. Beyond its new focus on airdrops, the lender reiterated previous warnings against crypto investment jobs and also fraudulent whitepapers which masquerade as “blockchain creation. ”Even though PBoC and the governmental political institution have widely adopted a positive stance towards blockchain, the PBoC’s ambivalent tone this week is not unprecedented, as other national regulators have similarly warned in the past from “mythologizing” the tech. […]

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