Chinese authorities were right to rein in cryptocurrencies, said Pan Gong-sheng, deputy governor of the People’s Bank of China.
China was once the dominant region for bitcoin trading in the world before the nation’s authorities began to crack down on cryptocurrencies in September, first by banning initial coin offerings and then shutting down domestic exchanges.
Pan believes Beijing made the right decision on the ban, according to local media reports.
“If we had not shut down bitcoin exchanges and cracked down on ICOs several months ago, if China still accounted for more than 80 percent of the world’s bitcoin trading and ICO fundraising, what would happen today? Thinking of this question makes me scared,” Pang told a financial forum in Shanghai.
Pan cited a recent column by economist Éric Pichet in the French newspaper La Tribune.
In it, Pichet, a professor at the Kedge Business School in France, makes a familiar argument that bitcoin is a bubble waiting to burst, just like the tulip mania in the 1600s and the internet bubble of 2000.
Pichet predicts that bitcoin will die of grand theft, a hack into the blockchain technology behind the cryptocurrency (which actually is unlikely), or a collective ban by global governments.
Quoting from a book by Pichet, Pan said: “As Keynes has taught us, ‘the market can remain irrational longer than you can remain solvent’. There is only one thing left to do: Sit on the river bank and see bitcoin’s body pass by one day.”
China accounted for over 90 percent of global cryptocurrency trading. But the country outlawed ICOs in early September, and in the following weeks, the cryptocurrency exchanges also said they would shut down due to regulatory pressure.
Yet, after the crackdown, Chinese exchanges and wallet services have reportedly shifted their activities overseas, and local investors headed for peer-to-peer marketplaces to continue their trades.
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