A senior official from the People’s Bank of China (PBOC) urged regulators to consider cryptocurrency risks and fraud leading to bank failures when innovating regulations. The Chinese official cited as an example the recent collapse of a U.S. bank that served crypto customers.” He stressed that “we must upgrade our regulatory philosophy, technology, and capabilities to ensure that financial innovation does not come at the expense of financial stability.
China’s Central Bank Governor on Crypto Risks and Bank Failures
innovations, including cryptocurrencies, could cause banks and lenders to fail, Changneng said. And quoted by Bloomberg:
Risks and fraud associated with cryptocurrencies, including two U.S. banks that got into trouble after offering many services in cryptocurrencies, from accepting deposits to settlements, should respect rules when regulators innovate regulations demonstrated that.
Although Chinese central bank officials did not mention specific banks, two crypto-friendly banks in the U.S., Signature Bank and Silvergate Bank, recently failed; Signature Bank was seized by the New York State Department of Financial Services foreclosed on by the New York State Department of Financial Services, and Silvergate Bank underwent voluntary liquidation.
The PBOC vice president said that there must be ample room for innovation, but stressed that regulators must “verify and confirm, rather than simply accept or approve, new technologies applied to various financial models and products.”
In addition, the central banker stressed:
We need to improve our regulatory philosophy, technology, and capacity to ensure that financial innovation does not come at the expense of financial stability.
At the same forum on Friday, Liao Min, China’s Vice Minister of Finance and Deputy Director of the Office of the Central Financial and Economic Commission, stressed the importance of the Chinese government’s active participation in international cooperation and standards coordination, saying stated that China needs to be “deeply” involved in the process.
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