The People’s Bank of China, China’s Central Bankwarns in its recent working paper on problems of Blockchain projects. Although the technologies could be found in a wide field of application, however, it was mainly the inadequacies of the technologies to be assessed. So, the financial institution legislator warns that there is a need for more Supervision and control, mainly due to money-laundering and the prevailing price volatility of Blockchain tokens. Thus, the Central Bank confirmed the currencies of their critical Tenor towards Crypto.
“What the Blockchain can do and what not” – this question is the recent working paper of the Chinese ensures the Central Bank. In its analysis, the Supreme monetary authority of the country, but little praise for decentralized technologies, but also highlights their shortcomings.
The paper gives, among other things, a lack of cost-effectiveness in the area of Blockchain Mining, the currently limited performance in the processing of large data sets and Smart Contracts, as well as to consider generally the hardly reached the goal of full decentralization. This would limit the actual value of the technology application is currently in use.
Currently, there are a few Blockchain projects, the “land really and social benefits” to be generated. Therefore, it is necessary in the first place, the research and development in the technology sector. Companies would have to, in turn, to be sensible before you decide the Blockchain-technologies.
“[Therefore] should be Blockchain based applications to the actual conditions and not due to the idealized purposes are limited”,
the paper calls for rigorous examination of how the application could be actual advantages.
Usual charge: crypto-bubble, calls for more Monitoring
The General shift in China to a Distributed Ledger technologies (DLT), especially of the state, the paper is also quite critical. So it is difficult to replace institutions and confidence through technology. For many scenarios, such ideas were “utopian”, warns the authority of great euphoria over technical Innovation.
Accustomed to the strict words of the Central bankers, in addition to for the Token and crypto-currencies:
“The current bubble in the Investment and Finance sector of the Blockchain [is] obvious: speculation, market manipulation and even illegal violations. Such behavior is widespread, in particular in projects in which tokens for offers to the public.“
In the face of huge price fluctuations and a lack of possibilities of Anti-money laundering and transparency measures, warns the paper concludes that relevant government departments should strengthen the supervision of Blockchain projects. Financial risks, it is important to prevent.
Blockchain-Boom in the middle Kingdom – despite critical voices
This sounds, however, are not. With the working paper, the Central Bank once again confirms the well-known critical Tenor towards crypto-currencies, of which Beijing firm had advanced in the past year, the regulatory bar.
The current warning technological shortcomings, Despite the middle Kingdom is, however, especially under the special patronage of the government – in the midst of a real Blockchain boom. Seemingly daily, new Blockchain-projects sprouting from the ground. Especially banks to apply the technologies. In September, about the Bank’s giant BoCom had issued for the first time securities of a DLT System.
Off cautionary words, the People’s Bank has got a little hand. As the Supreme financial authority is only responsible for the monetary policy of the Chinese yuan. Thus, the institution exclusively in the area of financial stability decision-making power. The General warnings of the Blockchain problems are to be understood mainly as an internal policy note of the Ministry of economy or company, in the application of DLT to look closely.