The Chinese central bank only will control the digital yuan.

Chen Weigang, former Vice President of China Insurance Regulatory Commission of the Communist Party, held wide-ranging discussions with Yiben blockchain media on Feb 27, according to Coin Telegraph. These talks covered the regulation of ICOs/cryptos in China and DCEP, the country’s digital currency.

ICOs and cryptos

Chen was unequivocal in his view that both cryptocurrencies and ICOs should be completely banned in China. Calling crypto speculation illegal, and ICOs as Ponzi schemes, he said: “I always believe that speculation in cryptocurrency and ICO is not the direction of financial development and must be resolutely banned.”

He recommended a co-ordinated approach jointly by all the Chinese regulatory agencies to crack down on these activities.

These authorities must include China’s banking and insurance regulatory commission, its securities regulatory commission, public security organizations, and Internet and social authorities, Chen recommended.

On China’s digital currency

However, on China’s proposed sovereign digital currency, his stand was remarkably positive. The digital yuan is known by the acronym DCEP (or, Digital Currency/Electronic Payment). It’s no secret that China has long wanted to end the US dollar’s hegemony as the world’s reserve currency. China’s DCEP may advance its ambitions in this regard.

Chen said: “We must be ahead of the rest of the world, at least technologically. Only in this way can the RMB take the initiative in the future international economic development.”

Earlier this month, Wired said China’s DCEP may become the world’s first sovereign digital currency. However, China would maintain a vice-like grip on the currency to stem clandestine capital outflows from the country, and which could emanate from corruption.  This control is not possible in a decentralized cryptocurrency which is outside the control of any government.

On the contrary, the DCEP would allow China to digitally advance its economy, yet completely control its financials.

Chen said: “As for digital currency transactions, I believe that the supervision of various departments in the country will become more and more strict, leaving no market for transactions. For example, Banks and formal payment institutions will be prohibited from providing channels for digital currency transactions. Private deals may continue, but they will not be mainstream.”

It appears therefore that the Chinese government may exercise complete control over the DCEP.

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