The Governor of the People’s Bank of China, Zhou Xiaochuan, has stated that China will not recognize Bitcoin and other digital currencies as a legitimate payment method. On the sidelines of a National People’s Congress, Zhou told Reuters that the country does not recognize the cryptocurrency as a currency.
Although having recently made statements about the need for China to be “bolder” in its approach to economic growth as he nears the end of a long-running term, Bitcoin specifically is precluded from participation according to Zhou.
Cryptocurrency still a Chinese pariah
Having held the position of the governor since 2002, Zhou is widely seen as a progressive reformer, having raised China from the world’s number six economy to number two, on the cusp of taking pole position.
Zhou’s statements follow previous onerous dictates from the PBOC during January and February 2018 that essentially banned ICOs and virtual coin trading and speculation.
Saying that “The banking system does not accept it [cryptocurrency],” Zhou went on to clarify by adding that they “do not currently recognize Bitcoin and other digital currencies as a tool like paper money, coins and credit cards for retail payments.”
In a double-whammy for Bitcoin, US regulators on March 8, 2018, published a report saying that “potentially unlawful” digital exchanges might be generating a false sense of safety and that the trading platforms needed to register and comply with existing regulations.
Zhou reiterated a common stance of lawmakers all over the world when he said that the distributed ledger, blockchain technology that supports cryptocurrencies like Bitcoin is worth close inspection, but that the ultra-rapid growth of Bitcoin and other virtual coins was the reason for concern.
“If they spread too rapidly,” Zhou said, “it may have a big negative impact on consumers. It could also have some unpredictable effects on financial stability and monetary policy transmission.”
At a recent virtual currency seminar in Beijing on January 20, 2018, Zhou had insisted that China’s shutdown of cryptocurrencies would not decelerate their growth.
In a somewhat schizoid statement, he had said that “It is therefore inevitable that cash will be replaced by new products and new technologies that have greater security and lower costs.”
Major financial institutions including the multi-national Citibank and auditors Deloitte attended and delegates focused on exploring cryptocurrency’s potential going forward. Zhou and his VP Fan Yifei and the majority of other attendees concluded that the phenomenon brought new opportunities and challenges in its wake.
Although both extremely positive and alarmingly negative statements and actions have ensued over the first two months of 2018 in China, it seems that a broad acceptance of digital coins is imminent.
Nonetheless, the current ban has made China the leading persecutor of virtual currencies in the Asia-Pacific region. The current freeze on wallets also seems set to be extended.
The price of Bitcoin fell some 13 percent or $100 in the wake of the PBOC announcement by midday Friday, March 9, 2018.