The PBOC: Bitcoin Cannot Become Fiat Money with the Lack of KYC and AML Regulations

On April 22, Huang Yusong, deputy secretary-general of Internet Finance Research Center of the PBOC, agreed at the first China Fintech 50 Forum that Bitcoin cannot become fiat money with the lack of KYC and AML regulations.

Huang explained that digital currency includes cryptocurrency (game coins, Bitcoins) and electronic currency. Electronic currency is composed of two parts: electronization of currency and electronized currency. By electronization of currency, it means that registered financial services circulate, transfer and pay electronically, which is actually just fulfilling their duties. And by electronized currency, it means that paying agents work to tap more potentials of the current system.

The PBOC, China’s central bank, is scrutinizing the feasibility of issuing digital currency across the country.  According to the central bank, the adoption of digital currency can reduce the costs of paper notes, in view of their issuance and circulation, increase the transparency of transactions in a bid to combat money laundering and tax evasion, and intensify the control of the central bank over the currency’s supply and circulation.

But Huang noted that it may take years for them to launch digital currencies.

Sheng Song, counsellor of the PBOC,  predicted that the PBOC might be working on digital currencies that involve technologies like Blockchain, mobile payment, reliable and controllable cloud computing, cryptographic algorithm and secure chip.

At the PBOC, it is developing digital currencies that can enable peer-to-peer payment without a third party, which will go a long way for China to renew its financial infrastructure and improve payment and settlement efficiency. Most importantly, all these will help build a transparent big data platform where money laundering, tax evasion and other crimes can be effectively curbed.

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