Former Top Chinese Regulator: Regulation Over Blockchain and Cryptocurrency is Better than a Complete Ban
Former vice chairman of the China Securities Regulatory Commission(CSRC) Gao Xiqing shared his thoughts on blockchain and cryptocurrency regulation last night in a star-stubbed wechat group called “three o’clock sleepless blockchain”. He believed right regulation would bring significant benefits to the blockchain community and cryptocurrency industry as a whole.
Here are Mr. Gao’s main points:
First, blockchain can solve the problem of fostering trust. The problems that previously have to be solved through third parties or governments can now be addressed by blockchain, lowering the hurdles to build trust among people.It provides an ideal space for trust-based transactions.
Second, blockchain will disrupt the financial services industry. All the financial systems we have seen to date are created on the basis of monopoly. Central banks’ monopoly power to issue currency and stock exchanges’ control over the securities market are best examples. The emergence of blockchain potentially challenges centralized markets and monopoly players.
Third and most importantly, governments around the world need to draw up legislation to regulate blockchain operations. On one hand, governments, central banks and other financial institutions, especially those big investment banks raise serious concerns about unregulated cryptocurrency investment landscape. On the other hand, they have an immediate worry which is precisely the key impediment for the rapid expansion of blockchain ecosystem. That’s why the industry calls for right regulation.
“The decentralised nature of blockchain means that it can exist without any regulation or legislation. Still, this assumption might be wrong. At present, 7 billion people in this planet form a huge system in which there are various kinds of competition. Therefore, you can hardly grow without adequate support, that is ,the blockchain industry will always be limited in a relatively small circle if it is not endorsed by regulators.”
He also mentions that all sorts of problems will surely occur in blockchain and cryptocurrency space as many people want to be filthy rich on cryptos by exploiting loopholes. So a dispute resolution mechanism is urgently needed.
“As long as authorities do not wield their power to kill cryptos, although I think it is hard to kill, and allow them to survive, the blockchain industry will flourish soon. We have seen blockchain’s applications in many industries.”
Regarding the relationship between cryptocurrency and fiat money, the Yutong Cheng Professor of Law at Tsinghua University Law School highlights that there will be irreconcilable contradictions if bitcoin ‘touches’ legal currencies, but this is not a serious issue because bitcoin does not aspire to replace the status of legal tender and governments will seldom recognize it.
Therefore, it is believed that governments will gradually realize that the benefits of establishing a regulatory framework to govern the space are greater than the complete ban.