This week Bobby Lee, founder and CEO of the China-based bitcoin exchange BTCC, warned that cryptocurrencies should be regulated or they will “run amok from society.” The conversation follows the recently introduced bitcoin-related regulatory policies administered by China’s central bank.
Also read: Chinese Congresswoman: ‘PBOC Should be Responsible for Bitcoin AML’
‘Regulations Needed for the New Asset Class’
Since January the People’s Bank of China (PBOC) has been enforcing strict rules towards bitcoin trading platforms in the country. The central bank worked with the top three Chinese bitcoin exchanges Okcoin, Huobi, and BTCC to establish new AML/KYC regulatory requirements. This included the ending of margin trading and zero-fee trades, alongside video identification requirements and the possibility of onsite verification for opening an exchange account. This week Bobby Lee, CEO of exchange BTCC, told CNBC’s broadcast “Squawk Box” that if cryptocurrencies are not regulated, things might get out of hand.
“I think regulation is much needed for this new asset class because otherwise, it’ll run amok from society,” explains Lee. “But the challenge is how to craft the rules around this new technology.”
“I think it’s taking the lawmakers and regulators some time to wrap their minds around it, and to come up with the appropriate rules and laws to govern companies, how we do business, to govern individuals and how people conduct business online.”
ICO’s and Capital Outflow
Lee’s statements are in the midst of the recent Initial Coin Offering (ICO) craze taking place in China and worldwide. China’s financial regulators have been concerned about token sales and believe statutes should be framed to protect investors. The news outlet Yicai Global just published an interview with Sheng Songcheng, a PBOC executive who said the government should draft regulatory standards like “information disclosure requirements.” Further, some believe the PBOC is also trying to curb capital outflows that may be tied to digital assets by cracking down on cryptocurrency businesses. However, Lee doesn’t believe that theory.
“It’s not really a crackdown — The central bank previously was not very aware of the details of how bitcoin is utilized, how bitcoin is traded,” says Lee.
There was a causation and correlation issue. People thought bitcoin was causing it — but after studying it more, I think the central bank has realized that bitcoin is not the cause of the change in exchange rate, nor is it the cause of the capital outflows.
The Central Bank’s Should Pay Attention
There’s still a lot more ground to cover as far as cryptocurrency regulation in China is concerned, and the country’s bureaucrats are well aware of the tasks they face. Many members of the central bank and government leaders are taking steps to understand the decentralized currency better, alongside rumors of building a renminbi-backed cryptocurrency as well. BTCC’s Bobby Lee believes the PBOC needs to pay more attention to cryptocurrencies so they can understand what they are regulating.
“It’s a new thing the central banks should pay attention to and figure out what the rules and regulations should be,” Lee concludes.
What do you think about Bobby Lee’s statements about cryptocurrency regulation? Let us know in the comments below.
Images via Shutterstock, Pixabay, and BTCC.
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