Someone from China’s bank has asked that regulators think about the risks of cryptocurrencies and scams that can cause banks to fail. He also mentioned a recent case in the US where banks stopped offering services to those using digital money. He concluded that rules must be improved with new technology and knowledge, so innovation doesn’t create more unstability.
The Dangers of Investing in Cryptocurrency
The Deputy Governor of the People’s Bank of China talked at a meeting called the Boao Forum on Friday. He warned that new money systems and things like cryptocurrency may be dangerous, and could make banks fail.
Sometimes, when people invest in cryptocurrency, it can be dangerous. This was shown by two American banks who tried to help with cryptocurrency but ran into trouble for not following the rules. So, it’s important for everyone to remember that when creating new regulations, they should always follow the rules.
Recently two banks in the United States, which allowed activities related to cryptocurrency, failed. These banks were Signature Bank and Silvergate Bank. The regulator of New York State Department of Financial Services took control over Signature Bank while Silvergate Bank was dissolved on its own will.
The PBOC deputy governor said that when creating something new, there must be enough room to let it happen. But regulators need to check and make sure the new technology and financial products are safe before allowing them. The official also mentioned that the regulations, technologies, and abilities should all be improved so that innovation is not taken away at the cost of safety.
On Friday, a Chinese government official said that China must take part in international activities and agreements. He encouraged everyone to be involved as deeply as possible.
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