China’s central bank urged the world to jointly control crypto

The People's Bank of China (PBoC) has released its latest financial stability report on issues related to cryptocurrency regulations and decentralized finance (DeFi), in which it calls for a global effort to establish crypto regulations.

China's central bank has dedicated a separate section to cryptocurrency assets in its new financial stability report, stressing the need to regulate the industry through joint efforts across countries. Published on December 22, the report says that the cryptocurrency market accounts for 1% of the global financial system, and its relationship with traditional finance is limited.

According to local industry journalist Colin Wu, the PBOC's latest financial stability report has for the first time dedicated a separate section to crypto assets. In the report, the central bank called on governments around the world to adopt a “same business, same risks, same supervision” approach to avoid regulatory arbitrariness.

The report cites several potential risks from cryptocurrency regulatory arbitrage, citing vulnerability to hacker attacks, market manipulation, and concerns related to DeFi government mechanisms. The PBoC cited the collapse of the Terra ecosystem and the collapse of the FTX exchange in 2022, stressing the need to manage regulatory fragmentation and eliminate regulatory arbitrage.

China's move to urge the global community to collectively regulate the cryptocurrency industry comes a few years after the mainland Chinese government imposed a major ban on crypto.

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In the year In 2021, the PBOC officially announced measures to combat crypto adoption in mainland China by pushing for strong inter-departmental coordination to curb crypto activity in the country. Although the ban covers all crypto transactions and cryptocurrency mining, mainland China remains a major crypto-mining hub.

According to some industry executives, such as Animoca founder Yat Siu, Hong Kong's rapid crypto adoption could signal “big moves” ahead in crypto regulation in mainland China. On the other hand, other local experts believe that China's crypto stance has nothing to do with crypto-friendly activities in Hong Kong.

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