Is China Finally Easing Up on Cryptocurrencies?

… according to experts, the establishment is beginning to see the benefits of mainstream coins like bitcoin, Ethereum, Litecoin, EOS and bitcoin cash.

It looks like some people (or entities) can change their minds after all. Despite a mixed relationship with cryptocurrency in the past, the People’s Bank of China (PBC) appears to finally be easing up to it.

Is China Becoming “Friendlier?”

As China’s central bank, the financial institution is looking to release its own digital currency in the future. This is not the same digital currency that China had initially announced weeks ago as a means of combating Libra. This would be an entirely separate entity, as according to experts, the establishment is beginning to see the benefits of mainstream coins like bitcoin, Ethereum, Litecoin, EOS and bitcoin cash.

This should come as relatively surprising news given that China has not always been kind (or fair) to digital currencies. The country has initiated a full ban on initial coin offerings (ICOs) and foreign exchanges and is even considering a full ban of cryptocurrency mining, though the country has been slow to act on this.

Kevin Sekniqi, co-founder and chief protocol architect at AVA Labs, says:

China’s foray into digitizing the yuan is a key milestone in changing how money is represented, stored and moved. Global sovereign level adoption of digitized assets is a testament to how transformative and impactful decentralized ledger networks have become… Coupled with the fact that China has completely adopted digital payment technologies, we can hope that a digital currency issued by the PBOC will further augment China’s ability to build many new financial primitives.

Dave Hodgson, director and co-founder of NEM Ventures, seems to agree with Sekniqi, though he’s critical of the centralized nature of the bank’s new digital currency, commenting that this goes against everything crypto is all about. He states:

It’s positive to see the Chinese Central Bank engaging with digital financial services and moving towards a better user experience for its citizens, but the proposed approached is still a centralized system, run by a national government… This wouldn’t be considered a decentralized cryptocurrency and in the People’s Bank of China’s words, ‘It is to protect our monetary sovereignty’ – a pseudonym for control over currency… I believe that this move will likely disrupt other digital currencies in China, such as WeChat and Alipay. While other governments may take note and follow suit, this currency doesn’t appear to be cross-border and is centrally controlled, which makes it a different proposition to cryptocurrency altogether.

Many Banks Will Do the Same Thing

Tomer Afek, CEO and co-founder of Spacemesh, says that other banks are likely to copy the work of China’s Central Bank, which could lead to a world of multiple cryptocurrencies:

Cryptocurrencies are a necessary evolution – and revolution…I envision a world where multiple cryptocurrencies exist, each one serving a different need. The central banks will become another set of competitors and service providers in this system.

Tags: china, China Central Bank, cryptocurrency

The Future Lies in Blockchain: Circle CEO Jeremy Allaire Backs China’s Cryptocurrency and …

The year is 2017. Cryptocurrencies and their underlying blockchain technology are sternly poised to take over the world. Investors, all around the …

The year is 2017. Cryptocurrencies and their underlying blockchain technology are sternly poised to take over the world. Investors, all around the globe, have poured as much as $6.2 billion into 875 crypto startups. Bitcoin booms drastically and new coins took the stage. However, the very next year, the market crashes. In between 6th January to 6th February 2018, the price of bitcoin drops by 65%. By September, the crypto world has collapsed 80% from its peak in January, making that year’s cryptocurrency crash far worse than the dot-com bubble’s collapse of 2004.

Blockchain, surprisingly, survives. It doesn’t crash along with it. On the contrary, the temporary fall of cryptocurrencies forced the blockchain realm into a world of true innovation and product development. Standing today, blockchain re-imagines a world full of incredible possibilities. Now, not only major industries like finance and energy are exploring exciting ways to leverage blockchain, but it’s also being said that this technology can give our traditional fiat currencies some unprecedented “super powers.” At least, so is the belief of Jeremy Allaire, CEO of Boston-based P2P crypto trading firm, Circle.

In a series of interviews over the last week, Allaire touched upon the current state of cryptocurrencies, envisaged the power of fiat-backed USD Coins (USDC), controversies around Facebook’s Libra, and the shape digital currencies are likely to take in our economic future. He justly explains how a digital version of the USD adds to transaction speed, security, and cost-effectiveness, while still being completely backed and reserved by central banks. His idea incorporates “all the benefits of price stability and the underlying price characteristics but with the power of the internet.” He also believes that while Bitcoin is competing with the likes of gold, digital versions of popular reserved currencies would transform the way we view everyday payments, seamless global transactions, and socio-economic relationships at a global scale.

Allaire also emphasizes China’s effort in creating a central bank-led digital currency (CBDC) that might propel the yuan to be renowned worldwide as a global reserve currency. For him, China’s foray into the digital currency domain heralds a pioneering step for the proliferation of CBDCs, which, in return, would make way for interoperability between the CBDC and Circle’s very own USDC—a stablecoin pegged to the U.S. dollar. Some of the crucial capabilities of the CBDC, as Allaire feels, is its ability to “go anywhere the internet can reach.” This sentiment echoes that of Changchun Mu, the head of China’s digital currency, who recently claimed CBDC of having similar qualities to that of Facebook’s Libra; including interoperability across major Chinese platforms, such as Alibaba and Tencent.

Further, he added,

“While accounting for his views on Facebook’s proposed cryptocurrency—Libra—Allaire asserts that he finds this project exciting, ambitious, and most importantly of huge potential. “It’s a huge step forward for how billions of people can exchange value around the world.”

Some of Allaire’s predictions have really high possibilities of coming true, sooner or later. He draws examples from the rise of the internet over the past 20 years how development in infrastructure has had direct transformational outcomes on media, communications, commerce, and retail. And currently, we’re merely at a juncture where the blockchain revolution is just beginning.

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Head of Libra Association Says Facebook’s Cryptocurrency Will Launch in 2020, Renminbi “Will …

Bertrand Perez, General Director of the Libra Association says Facebook has no plans to delay the launch of its global (crypto)currency network, …

Bertrand Perez, General Director of the Libra Association says Facebook has no plans to delay the launch of its global (crypto)currency network, despite outcry from global regulators.

“We are firmly maintaining our launch schedule, between the end of the first half of next year and the end of 2020,” Perez told online French news site Les Echos this week.

Facebook may be attempting to kowtow to powerful Western interests to help ease tensions if Perez comments to Les Echos are any indication.

In the interview, he assured the public, “the Renminbi will not be part of,” the basket of reserve currencies used to back Libra.

The comment is noteworthy.

In July, Chinese bankers convening at an academic conference at Peking University expressed serious concerns that Libra could upset the balance established by the International Monetary Fund’s Special Drawing Rights basket.

That basket currently includes the Chinese yuan, US dollars, Euros, Japanese yen and British pounds, and “serves as the unit of account of the IMF and some other international organizations.”

“If the digital currency (Libra) is closely associated with the US dollar,” said Wang Xin, director of the People’s Bank of China (PBOC), “it could create a scenario under which sovereign currencies would coexist with US dollar-centric digital currencies. But there would be in essence one boss, that is the US dollar and the United States. If so, it would bring a series of economic, financial and even international political consequences.”

Perez’ interview did nothing to quell China’s concerns:

“(The Libra coin) is 99% fixed, and will include the dollar, euro, yen, pound sterling and Singapore dollar…(as well as) very short-term government dept (less than one year) of these countries.”

As well:

“We are still thinking about weightings, but the dollar should have a very significant weight, around half.”

The Libra Association plans to ongoingly adjust basket holdings based on performance, said Perez:

“If there is a disaster on a currency or crisis between now and the launch of the Libra, we could remove it from the basket, but this decision should be subject to a vote and taken by a two-thirds majority of the association’s members.”

Critics have warned rapid implementation of Libra payments across Facebook’s network of 2.4 billion users could have a destabilizing effect on the current global financial balance and/or could undermine sanctions or illicit finance controls.

Critics have also questioned Facebook’s ability to competently act as a central bank adjusting the taps on a massive currency system, especially given the company’s dramatic mishandling of customer data (ie. the Cambridge Analytica affair).

Other critics have argued that history has proven that currency systems are best managed by elected bodies- not private companies.

The Libra Association has 28 current (mostly corporate) members, and Perez told Les Echos the association plans to bring that number to 100 by next year.

Perez also claimed the association has received “many more than a hundred” requests to join.

Perez dismissed concerns regarding the potentially destabilizing effect of Libra, and said the system will circulate, “a hundred and probably no more than $200 billion (units).”

According to the current model, Libra coins will be “stablecoins” designed to maintain a consistent value via rebalancing of assets in the reserve basket.

The relatively insubstantial amount of Libras (initially?) makes concerns about destabilization overblown, said Perez:

“This is a low figure compared to the global financial markets for currencies. We are not going to become a new BlackRock. For this reason, we do not believe that the fears about the destabilizing nature of this reserve on the monetary policy of the central banks whose currencies are in our basket are well founded. It is their monetary policies that will influence Libra, through the basket, and not the other way around.”

Perez added that, “Facebook’s motto encourages governments to accelerate their own cryptomoney projects”:

“We are also assuring central banks that…we are not going to create money. We are not here to do the work of the banks.”

While the Libra network will not be fully implemented until at least next year, Perez claimed that, “(Libra) is about to obtain…approval as a payment system in Switzerland.”

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China’s PBC Is Warming Up To Digital Currencies — Good News For Bitcoin, ETH, XRP, and LTC

That may come as a big surprise to some. Back in 2017, China banned Initial Coin Offerings (ICOs), and stopped direct Bitcoin-yuan trading, crushing …

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China’s Central Bank, the People’s Bank of China (PBC), is planning to introduce its own digital currency.

That’s according to an article published in Globaltimes last week, which says that the PBC applied for 74 patents involved with digital currencies to the National Intellectual Property Administration, in order to speed up the development of a legal digital currency.

That may come as a big surprise to some. Back in 2017, China banned Initial Coin Offerings (ICOs), and stopped direct Bitcoin-yuan trading, crushing cryptocurrency markets.

Now, cryptocurrency experts see PBC’s efforts to introduce its own digital currency as a recognition of the many advantages cryptocurrencies have over traditional currencies, and therefore, consider those efforts to be good news for major cryptocurrencies like BTC,ETH, XRP, and LTC.

Kevin Sekniqi, Co-Founder and Chief Protocol Architect at AVA Labs, is one of these experts.

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“China’s foray into digitizing the yuan is a key milestone in changing how money is represented, stored, and moved,he says. “Global, sovereign level adoption of digitized assets is a testament to how transformative and impactful decentralized ledger networks have become.”

Meanwhile, he sees PBC’s move as a source of further financial innovation. “Coupled with the fact that China has completely adopted digital payment technologies, we can hope that a digital currency issued by the PBOC will further augment China’s ability to build many new financial primitives,” he says.

Dave Hodgson, Director and Co-Founder ofNEM Ventures, agrees. “It’s positive to see the Chinese Central Bank engaging with digital financial services and moving towards a better user experience for its citizens,” he says.

Still, he points to the centralized nature of PBC’ proposed currency as a limiting factor.

“The proposed approach is still a centralized system, run by a national government,” he says. “As a result, this wouldn’t be considered a decentralized cryptocurrency and in the People’s Bank of China’s words, ‘It is to protect our monetary sovereignty’ – a pseudonym for control over currency. “

While Hodgson sees the new currency competing with China’s other digital currency, he doesn’t see it competing with major cryptocurrencies. “I believe that this move will likely disrupt other digital currencies in China, such as WeChat and Alipay,” he says. “While other governments may take note and follow suit, this currency doesn’t appear to be cross-border and is centrally controlled, which makes it a different proposition to cryptocurrency altogether.”

Pradeep Goel, CEO of Solve.Care, sees central bank-issued digital currencies as supplementing major cryptocurrencies, too. “The uses of digital currencies have significant potential and known benefits, and these advantages are compelling enough to merit the careful adoption of these currencies,” he says. “Whether the private sector leads and central banks follow, or whether the central bank leads and the private sector follows, will vary by country. For example, in Sweden, the central bank is leading the way with the introduction of an e-krona.”

And Tomer Afek, CEO and Co-Founder of Spacemesh, sees other central banks following through with their own digital currencies. “It’s a certainty that other central banks will follow China’s lead; the writing’s on the wall. Currency is already well on its way to becoming fully digitized, and cryptocurrencies are a necessary evolution – and revolution – of that process,” says Afek. “States will inevitably want to ride the wave, hoping to get ahead of its potential to shake up the status quo.

That could create a world of multiple cryptocurrencies.

“This is only the beginning for cryptocurrencies, and they’ve already proven their ability to capture the value that has been omitted by the traditional monetary system,” he says. “I envision a world where multiple cryptocurrencies exist, each one serving a different need. The central banks will just become another set of competitors and service providers in this system.”

Still, the central banks will always have the upper hand, ready to trash decentralized cryptocurrencies should they threaten their monopoly of creating money, as discussed in previous pieces here.

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Stormclouds gather for Facebook’s Libra currency

The Libra Association, a nonprofit organisation based in Geneva, has been formed to oversee the digital currency’s network. France takes aim.
Facebook wants to tap into its two billion Facebook users around the world, which it hopes will use Libra for online shopping, financial services and payments. — AFP picFacebook wants to tap into its two billion Facebook users around the world, which it hopes will use Libra for online shopping, financial services and payments. — AFP pic
Facebook wants to tap into its two billion Facebook users around the world, which it hopes will use Libra for online shopping, financial services and payments. — AFP pic

SAN FRANCISCO, Sept 14 — International outcry is mounting over Facebook’s Libra — with central banks, governments and regulators railing against the social media giant’s upstart cryptocurrency.

Facebook unveiled plans in June for Libra — which will roll out in 2020 — to be backed by a basket of currency assets to avoid the wild swings of Bitcoin and other virtual units.

Facing staunch opposition in Europe, Libra’s boss admitted to AFP late on Thursday that it could yet decide not to operate in the region.

“We do not want to play at being pirates,” said Bertrand Perez, managing director of the Libra Association, on the sidelines of a cryptocurrency event in Paris.

“If the European Central Bank refuses us permission to operate in Europe, then we will not operate there,” Perez said, describing regulatory concerns as “legitimate” but not insurmountable.

The Libra Association, a nonprofit organisation based in Geneva, has been formed to oversee the digital currency’s network.

France takes aim

France has become the latest vocal opponent, warning it would block Libra’s development in Europe because the proposed currency threatens the “monetary sovereignty” of governments.

“I want to be absolutely clear: in these conditions, we cannot authorise the development of Libra on European soil,” French Finance Minister Bruno Le Maire said Thursday.

The Silicon Valley giant wants to tap into its two billion Facebook users around the world, which it hopes will use Libra for online shopping, financial services and payments.

Yet Le Maire fired back: “The monetary sovereignty of countries is at stake” from a “possible privatisation of money … by a sole actor with more than two billion users on the planet.”

A top ECB official recently warned that Libra could harm both the institution and the euro.

“I sincerely hope that the people of Europe will not be tempted to leave behind the safety and soundness of established payment solutions and channels in favour of the beguiling but treacherous promises of Facebook’s siren call,” said ECB board member Yves Mersch.

Nevertheless, Emilien Bernard-Alzias, a London-based lawyer who specialises in financial markets and cryptomoney, talked down the impact of growing global opposition to Libra.

He told AFP that such “political statements have no real legal meaning” and their “alarmist” arguments were unlikely to stop the birth of Libra — even if the possibility of an outright ban cannot be completely ruled out.

Facebook’s sheer scale means the proposed Libra currency could potentially roil the global financial system and make the job harder for the world’s central banks.

Bloomberg uncovered internal documents last month showing that European Union antitrust regulators are “currently investigating potential anti-competitive behaviour” linked to the Libra project.

But Bernard-Alzias added that there are “many countries in which (Libra) would already be compliant” with national regulations.

And he noted that it could likely be classified as electronic money under existing European Union laws.

Growing unease

European officials, already wary of the US dollar’s dominance in foreign exchange, appear reluctant for a US company to gain such a strong foothold, Bernard-Alzias cautioned.

In response to growing unease, Bank of England governor Mark Carney called for tough worldwide regulation of Libra — and floated the idea of a global cryptocurrency that could be backed by public institutions like central banks.

The US Federal Reserve also sounded the alarm and declared that Libra raises serious concerns regarding privacy, money laundering, consumer protection and financial stability.

President Donald Trump has already slammed virtual currencies for their alleged shadowy nature and argues that Libra has no standing nor dependability — unlike the greenback.

Elsewhere, China has accelerated plans to develop its own yuan-based virtual unit. — AFP

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