Push For Yuan-Pegged Cryptocurrencies Gathers Pace in China
China has for the longest time shied away from the cryptocurrency debate after banning them early in the year. Amidst the ban, some people believe the country needs to reconsider its stance. A researcher with the People’s Bank of China is the latest to push for a policy change, focusing on Stablecoin.
A report by CN Finance indicates that Li Liangsong is of the opinion the central bank should be more tolerant to Stablecoin. The Fudan University professor and other authors believe the PBoC should consider backing institutions offering Yuan pegged cryptocurrencies.
A push for a Yuan pegged cryptocurrency comes on growing concerns of the kind of impact the dollar is having in the sector. A number of cryptocurrencies pegged on the dollar have already cropped up. The likes of Liangsong believe, now is the time for China also to accept Yuan-backed crypto’s.
The authors of the CN Finance report argue that U.S Dollar pegged cryptocurrencies will continue strengthening the dollar. Such a feat would have significant effects at a time when China finds itself at crossroads with the U.S on trade relations.
“If the U.S. dollar-pegged Stablecoin can eventually be widely recognized by the market and can prove their use in the real economy, we should double down on our research efforts [on the issue] and learn from relevant experience to support domestic institutions to issue Yuan-pegged crypto Stablecoin," CN Finance authors in a statement.
Calls for legalization of Stablecoin in China are gaining momentum. Joining the fray is OKCOIN founder Star Xu. The executive believes it is the right time for Chinese Stablecoin to hit the market. Amidst the calls, such coins face an uphill task to see the day of light.
Regulators continue to stay away from the debate on concerns of the kind of impact, Stablecoin will have. For instance, there is fear that such coins could end up demeaning the role of central banks. Fiat currencies would end up paying the ultimate prices as collaterals. In return, central’s banks will see their roles in payment settlements and momentary policies significantly affected.
China banned cryptocurrencies on claims people were using them for money laundering purposes. Increased concerns that they could also fuel terrorist activities saw the authorities talk tough to the extent of banning them. However, resentment towards Stablecoin would arouse questions as to the country’s real motive with the ban.