China Seeks Global Cooperation in Crypto Regulation

In its most recent financial stability report, the People's Bank of China (PBoC) discussed concerns surrounding cryptocurrency regulation and decentralized finance (DeFi), advocating for a global initiative to create crypto regulations.

In its latest financial stability report, the Chinese central bank included a special section on cryptocurrency assets, emphasizing the necessity of international cooperation in regulating the sector.

According to a report released on December 22, the cryptocurrency market makes up 1% of the world's financial system and has little to no relationship with traditional finance.

For the first time ever, PBoC's most recent financial stability report includes a separate section devoted to cryptocurrency assets, according to local industry journalist Colin Wu.

In order to prevent regulatory arbitrage, the central bank urged governments everywhere to implement the "same business, same risks, same supervision" strategy in its report.

The report mentioned several possible risks associated with cryptocurrency regulatory arbitrage, including market manipulation, hacker attack vulnerabilities, and issues with DeFi government mechanisms.

The collapse of the Terra ecosystem and the FTX exchange in 2022 were specifically brought up by the PBoC, which emphasized the need to control regulatory fragmentation and do away with supervision arbitrage.

A few years after the government of mainland China imposed a significant ban on cryptocurrencies, China has moved to urge the international community to jointly regulate the cryptocurrency industry.

The People's Bank of China (PBoC) formally declared in 2021 that it would take action to resist the adoption of cryptocurrencies in the Chinese mainland.

It advocated for tighter interdepartmental cooperation in the fight against cryptocurrency activity.

Mainland China has continued to be a significant center for cryptocurrency mining despite the prohibition that applies to almost all cryptocurrency transactions and mining.

Sources:

https://cointelegraph.com/news/china-pboc-crypto-defi-stability-report

http://www.pbc.gov.cn/jinrongwendingju/146766/146772/5177895/2023122217072818365.pdf