China on Monday reaffirmed its hardline approach towards virtual currencies at home, warning of the risks of stablecoins, despite growing concerns that the United States might have consolidated its US dollar dominance through them.
Instead, the world’s second largest economy vowed to broaden the use of its central bank digital currency known as e-CNY, according to Pan Gongsheng, governor of the People’s Bank of China.
“[Stablecoins] are still in their early stages of development,” said Pan, noting that financial regulators worldwide still maintain a cautious stance towards the development of the virtual currency pegged to another asset.
“As a financial activity, stablecoins currently fail to effectively meet basic requirements such as customer identification and anti-money-laundering, exacerbating gaps in global financial regulation,” he said at the opening ceremony of the Financial Street Forum in Beijing.
This has fostered a strong atmosphere of market speculation, increasing the vulnerability of the global financial system and having an impact on the monetary sovereignty of some less developed economies, he added.
Pan said the central bank will work with law enforcement agencies to continue to crack down on the onshore operation and speculation of virtual currencies.