China’s Relations With Cryptocurrency
In China, cryptocurrency prices are established by The People’s Bank of China (PBOC). Since 2017, Initial Coin Offerings (ICO) have become illegal in the jurisdiction and an issuer of an ICO will be sentenced from ten years to a life sentence.
Cryptocurrency trading and token financing platforms are also banned in China. In addition, financial institutions aren’t allowed to participate in crypto coin trades. After this announcement, large crypto exchanges, such as Huobi and OkCoin, left the country. On the other hand, small exchanges just closed.
Overall, compared to other jurisdictions, China has harsh crypto regulations. However, decentralized cryptocurrencies are still legal in China.
On the other hand, Facebook’s new cryptocurrency, despite Facebook’s claims of decentralization, is considered centralized by the Chinese government.
China Going Against Libra
What Is Libra?
Libra is a cryptocurrency based on a distributed ledger and is managed by the Libra Association. Some Members of the Libra Foundation are Mastercard, PayPal, Visa, Anchorage, Andreessen Horowitz, Women’s World Bank, and others. By the time of the coin’s launch, there will be approximately one hundred members.
Rumors about Facebook launching a cryptocurrency have been around for some time now. In May 2019, the company announced Libra and, shortly after, it was reported that a hearing about the social media giant’s new crypto coin will be held soon.
Senators declared that Facebook is already too big and had abused its power once before. Allowing Facebook to launch a new risky crypto coin is dangerous.
As a cryptocurrency, Libra is a stablecoin and will be backed by a reserve of stable assets. This is because the Libra Whitepaper claims that the volatile nature of crypto coins hindered their mass adoption.
All things considered, Facebook entering the crypto world attracted many outsiders took interest in it. Yet, the feedback from financial institutions, governments, and early crypto enthusiasts was anything but positive.
China’s Response To Libra
According to a Chinese news outlet, the director is PBOC’s research bureau, voiced his concerns about Facebook’s new crypto coin. He claimed the fact that such a currency that has the potential of changing the financial industry belonging to private companies is dangerous.
If the currency becomes widely used it will start having an influence on the international monetary system and the stability of the financial industry. The Chinese government is very cautious of the influence that Libra could have in the long term.
The authorities are worried that Libra, a stable coin linked to the USD, could lead to the United States Dollar becoming a central currency of some sort. Subsequently, this will bring out many financial, economic and political issues.
Other jurisdictions such as Japan and India have also expressed their concerns over the new crypto coin’s impact on the world. The government of the United States has also asked the CEO of Facebook, Mark Zuckerberg, to delay the release of their new crypto coin.
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