China’s central bank highlights cryptocurrency regulation in financial stability report

In its recently released 2024 Financial Stability Report a report, The People’s Bank of China (PBOC) has stressed the importance of regulating cryptocurrency activities amid ongoing global efforts. The report, published on Friday, included a section that specifically addresses the cryptocurrency regulatory landscape and details Hong Kong’s thriving cryptocurrency licensing system.

The People’s Bank of China noted that 51 jurisdictions around the world have imposed bans or restrictions on cryptocurrency assets. This includes mainland China, where a comprehensive ban on all cryptocurrency trading and mining was implemented in September 2021.

In contrast, Hong Kong has adopted a different approach, actively welcoming cryptocurrency companies. As of June 2023, the region has officially launched a licensing system for cryptocurrency trading platforms, allowing licensed exchanges to offer retail trading services.

The report also highlighted that major financial institutions, including HSBC and Standard Chartered Bank, are now required to monitor cryptocurrency transactions as part of standard customer supervision protocols.

The move signals a shift in regulatory practices within Hong Kong, which aims to integrate cryptocurrencies into the existing financial framework.

In addition, the People’s Bank of China is committed to strengthening the international regulatory framework for crypto assets, as proposed by the Financial Stability Board.

While the central bank acknowledged that links between cryptocurrency activities and systemically important financial institutions may be limited, it warned that cryptocurrencies may pose risks in some economies, especially as their use in payment systems and retail investments expands.