China Should Take Part in Creating Global Regulatory Framework for Digital Currency, Xi Says

Chinese President Jinping Xi said China should proactively participate in creating the international regulatory framework on digital currency.

  • “We need to take advantage of the momentum and accelerate the digitalization of various fields including our economy, society and government, as well as proactively participate in creating the international regulatory framework on digital currency and digital tax,” Xi said in his statement on Saturday titled Issues on National Medium and Long-Term Social and Economic Strategies. 
  • The statement came days after China’s central bank released the proposed banking law to legalize its national virtual currency and ban any other yuan-pegged tokens in the country.
  • The People’s Bank of China (PBOC) sped up the development of the digital yuan last year when the U.S. social media giant Facebook unveiled the plan to launch its digital currency Libra backed by fiat currencies from several major economies excluding China.
  • A slew of countries and international organizations have started working on a global legal framework to regulate cryptocurrencies and prevent regulatory arbitrage.
  •  The U.S. Department of Justice released its enforcement framework on crypto with a focus on international crypto exchanges in October, while global institutions such as the Bank for International Settlements (BIS) are investigating the impact of stablecoins.
  • PBOC has conducted mass arrests and shut down online gambling sites for activities involving the tether (USDT) stablecoin a week ago. Seventy-seven suspects have been arrested and three gambling sites have been shuttered.
  • The Chinese police froze bank accounts over crypto and fiat assets tainted by illicit activity in June. Some Chinese crypto buyers and sellers, and market makers such as over-the-counter trading desks (OTC) were affected by the investigation.