Unlike many countries like Japan, China has taken a stern stand towards virtual currencies. The central bank governor, Zhou Xiaochuan asserted on Friday, that China as a state does not acknowledge bitcoin and other virtual currencies as legitimate modes of payment.
“We do not currently recognize Bitcoin and other digital currencies as a tool like paper money, coins and credit cards for retail payments,” stated Zhou on the side during the annual parliament session. “The banking system does not accept it.”
China has been taking decisive steps to bring a clampdown on cryptocurrencies in the country. These steps include shutting down of exchanges and the banning of the now popular digital token-based fundraisers – Initial Coin Offerings, or ICOs.
These remarks come in face of rising pressures on the cryptos around the globe. The United States stated on Thursday that potentially unlawful exchanges and online trading platforms were cropping up, which give a false sense of security to investors. These platforms need to be registered with the regulators.
As reported earlier by CoinPublish, Bitcoin has slipped to its 3-and-a-half-week low and had fallen by more than 13 percent in the 24 hours till 1030 GMT on Friday.
Zhou, however, revealed that the state was closely following the developments in the blockchain and the distributed ledger technology that these virtual currencies are built on. But, according to him, some applications [read, digital currencies] of this technology have grown way faster than one can be comfortable with.
“If they spread too rapidly, it may have a big negative impact on consumers. It could also have some unpredictable effects on financial stability and monetary policy transmission,” said Zhou.
These new revelations from the People’s Republic of China do pose new challenges for virtual currencies to establish themselves into the existing financial and regulatory system.