China’s Central Bank Warns About the Blockchain Investment ‘Bubble’

Although China issued a hard hitting crackdown on the local crypto market last year, the Asian economic giant has promoted a number of blockchain initiatives in the country. China currently ranks first in the number of blockchain patents filed.

However, the country’s central bank - Peoples Bank of China (PBoC) - has recently warned of “bubbles” in the blockchain related investments and financing. The PBoC is well-known for its anti-crypto stand. Several times the central bank has asked the Chinese government to bolster its supervision of “speculation, market manipulation and other irregularities”. PBoC says that the claims are also common for blockchain investment and financing schemes.

The country’s local news publication like the Wall Street China unveils more details into the working paper titled “What Can Blockchain Do and What Can it Not?” issued by the PBoC earlier this week on November 6.

The paper is authored by Xu Zhong, director of the Research Bureau of the PBoC. The publication notes: “There are few blockchain projects that really land and generate social benefits. In addition to the low physical performance of blockchains, the shortcomings of blockchain economic functions are also important reasons. It should be based on continuous research and experimentation. Rationally objectively assess what the blockchain can and cannot do.”

Another Local News Publication Forex East Money says that a majority of the “mainstream” blockchain projects have adopted the path of “tokenization”. The publication also clarifies other technological principles like smart contracts, consensus mechanism, and other token use-cases within the blockchain ecosystem. The publication also notes that PBoC has also analysed other security aspects and performance of blockchain systems. However, the report concludes while presenting the limitations as well as the merits of the blockchain technology.

The PBoC has been actively monitoring the recent developments within the crypto space and taking several measures to prevent local citizens from participating in the global crypto market. In August, China banned and blocked access to 24 Foreign Crypto Exchanges.

Moreover, the central is also having a strict vigilance against fraudulent token whitepapers and other cryptocurrency projects which have been promoted as “blockchain innovation”.