Cryptocurrency

China’s Political Adviser Proposes National Crypto-Assets Exchange

Advisory to open a Chinese National Crypto-Assets Exchange and Major Regulations

During a two-day summit of China’s top legislative council, Weng Pengjie, an advisor to the CPPCC called for the creation of a national crypto exchange platform and regulation of the Chinese crypto ecosystem. He proposed that the People’s Bank of China (PBOC) and China Securities Regulatory Commission (CSRC) should create a national digital asset management system and a trading platform as well.

His remarks come hot on the heels of recent Chinese government actions in blocking foreign crypto platforms and bans on ICOs. He outlined several reasons for doing so. In his address, he noted that in January 2018, the value of crypto assets far outstrips that of China’s biggest ISP, Tencent. Mr. Pengjie also commented on South Korea’s regulation of digital markets and the US Nasdaq favorable attitude towards trade in Bitcoin futures.

Nonetheless, he further commented on the unique challenges of the blockchain in the Chinese context. According to him, China lacks a fully developed and autonomous intellectual property rights policy that can address these challenges. As a result, he foresees potential financial instability and insecurity for the country in the long-term. Also, in his speech, Mr. Pengjie decried the lack of clear legal provisions regarding cryptocurrencies as well as poor consumer knowledge in China. He contends that unscrupulous blockchain based fraudsters can cause significant economic ruin.

Possible solutions to the above problems include the creation of an approval system, a real-world certification authority, and the provision of adequate public education on the blockchain and digital currencies as ways to mitigate these challenges.  Additionally, Pengjie suggested that the PBOC and CSRC should have oversight of the proposed national digital exchange platform. In this way, Chinese blockchain startups and investors will have access to funding and investment opportunities respectively.

In November 2017, the CSRC agreed to collaborate with Australia on fintech solutions. However, the PBOC’s recent bans on external crypto exchanges, ICOs, and restrictions on exchange-like services precipitated Bitcoin’s downward spiral in value.