Wen Xinxiang, the director of payment and settlement at the Peoples Bank of China (PBOC) has explained why crypto adoption is a problem for the Asian country.
He spoke at a payment and settlement forum on Friday according to local news source, Shanghai Securities Journal.
Mr Wen stated that one of the main challenges of crypto is that the industry is capable of operating separately from the traditional payment system which makes it independent of commercial banks and payment institutions.
He also noted that cryptos are a threat to payment services by banks provide as they weaken the power of these organizations.
He pointed at the market value of Bitcoin at $800 billion and the total stablecoin market capitalization exceeding $120 billion. With this, he noted that cryptos are a major risk for the traditional payment system.
Wen further indicts crypto, call for traditional finance improvement
The PBOC executive further argued that the anonymity of cryptocurrencies makes it an attractive tool for facilitating illegal transactions such as money laundering, urging for improvement and more measures for the traditional financial system to compete with crypto.
Wen noted that the digital asset world faces a lot of challenges hence, the traditional finance system should outpace it such that cryptos eventually need to rely on traditional finance for survival.
His comments are a reflection of what is happening in China with the crypto industry as government there has intensified effort to crackdown on cryptocurrency trading and mining.
China and its tough crypto crackdown
On Friday, the crypto crackdown by the country led to serious plunge in the market. The PBOC talked ill about cryptocurrencies calling the activities and transactions illegal leading to the fall in crypto prices. PBOC officials also vowed a harsh crackdown on the crypto market.
China strictly banned all the services offering crypto trading and also prohibited token issuance and derivatives for cryptocurrencies.
On its website, the People’s Bank of China also stated that it will not allow any foreign crypto exchange service offerings to domestic residents.
Vowing intense crackdown, PBOC said it will investigate the activities of foreign exchange workers. The bank noted that it has improvised the existing system for a thorough investigation of transactions related to crypto.
Before now, local Chinese authorities have been shutting down multiple mining farms and suspending crypto trading transactions.