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Lu Lei, China’s deputy head of the State Administration of Foreign Exchange (SAFE), recently engaged with stakeholders at a conference in Beijing where he said that the state agency is currently considering expanding the blockchain pilot to facilitate an enhanced integration of fintech and foreign exchange markets.
Lei said that in order to expand its blockchain cross-border platform across global forex markets, the government will undertake a prospective study to assess and evaluate regulatory measures that can fit well within the context of global foreign exchange markets in the age of digital currency technology. The prospective study will “explore the construction of the foreign exchange regulation and technology system under the new situation.”
The underlying goal of the state is to expand the scope of the blockchain pilot by venturing into new application possibilities to facilitate cross-border financing and macro prudential management.
According to Lei, SAFE’s cross-border financing blockchain platform is the only one registered thus far by any central state agency at the Cyberspace Administration of China (CAC). The blockchain platform has been performing particularly well since its launch as it has processed almost 6,400 transactions until November of this year; these include local and global loans totaling at around $6.8 billion.
The blockchain platform aims to reduce the reliance on human manual cross-checking, and thereby reducing the processing time required to complete a transaction. This is one of the key features of a digital ledger. It, by virtue of its design, can minimize the effort needed to validate meta-data and complete transactions in a matter of hours (or even minutes).
China’s Domination of the Blockchain Sphere
China, with its massive blockchain industry, has been swift at making progress in this space. Ever since the Chinese president, Xi Jinping, said that China should pace up the development of blockchain technology, several companies have started developing and deploying their own blockchain pilots.
The stock markets have seen an increased investment in companies which are venturing into cryptocurrency and blockchain. Investors’ solid confidence is steering this growth and now, the Chinese state is interested in creating the ideal platform in which these industries could be unleashed into the global foreign exchange markets.
Blockchain platforms such as those operated at SAFE have been a huge success for the local Chinese ecosystem. Now, the aim is to export the system to global markets and capitalize on this success story. The statement by Lei is a testament to that commitment and it reveals the master plan of the Chinese government to infiltrate and dominate the global blockchain market.