China’s central bank has called on the government to strengthen supervision into ‘speculative’ financing and investments in the blockchain sector.
The Research Bureau of the People’s Bank of China, the country’s central bank, published a working paper titled ‘What can a blockchain do and cannot do?’ on Tuesday.
An early analysis of the working paper by CCN China can reveal that the central bank’s research arm is studying the impact of blockchain and various projects aimed at commercializing the decentralized tech in society.
Pointedly, the central bank authority called for a measured view on blockchain technology. “Firstly, don’t exaggerate the function of the blockchain,” a translated excerpt from the working paper reads. Some industry practices in the years since the advent of blockchain technology have “proven that some blockchain applications are not feasible,” particularly in the financial sector.
“So far, no technological innovation has had a disruptive impact on the financial system, and blockchain is no exception,” it added.
Further, the PBoC’s research unit also called on relevant Chinese government agencies to enhance supervision of financing into the sector after claiming public token fundraising through ICOs areis violation of laws.
For context, Chinese authorities including the PBoC issued a sweeping ban on all ICOs in the country.
The PBoC’s working paper, translated by CCN China, stated:
Currently, the bubble in the blockchain investment and financing sector is obvious. Speculation, market manipulation, and even violations of laws and regulations are common, especially for token projects involving public offering transactions. Relevant government departments should strengthen supervision and prevent financial risks.
Today’s paper follows a public notice by the PBoC in September that warned consumers and investors to be wary of the risks in cryptocurrency trading and initial coin offerings (ICOs).