The People’s Bank of China report also highlights global crypto trends, with particular emphasis on increased regulatory scrutiny following the volatility of crypto markets in 2022. Despite a rebound in 2023 and a global total value exceeding $3.9 trillion this year, Chinese regulators remain cautious about the risks digital assets may pose to the country’s financial system.
On the other hand, the report pointed out several concerns, including the potential drain of traditional financial market investments by crypto markets, market manipulation practices, and weak investor protection within decentralized finance (DeFi) systems. The report also highlighted the efforts of international bodies - such as the Financial Stability Board (FSB) and the International Monetary Fund (IMF) - to develop a unified regulatory framework for digital assets.
The Chinese central bank report also emphasized - in particular - the importance of international cooperation in addressing the risks related to digital currencies, noting in this regard that the Financial Stability Board established an international regulatory framework for digital assets in July 2023. This framework emphasizes the principle that “the same activities relate to the same risks and therefore require similar regulatory oversight,” calling for the adoption of uniform regulatory standards across different markets.
Hong Kong recently pledged to implement the Digital Asset Reporting Framework (CARF) by 2026, in order to enhance international tax transparency and tackle crypto-related tax evasion internationally.
