Cryptocurrency faces a global cold winter

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Europe

Cryptocurrency bounced back from three-month lows on Tuesday, but the recovering trend cannot stop the vigilance of some countries.

The system still has not been proven to be technically reliable, transparent and safe, said Wang Jianhui, general manager of the R&D department at Capital Securities, explaining why most governments hold a negative attitude towards cryptocurrency.

China, as one of the prudent governments, started monitoring overseas websites of virtual currency trading platforms on Monday after its central bank imposed a ban on initial coin offerings (ICO) last September.

Chinese payment platforms, such as Tencent’s Wechat Pay and Alibaba’s Alipay, have said they will never support and provide services to cryptocurrency deals.

And China is not the only country rejecting cryptocurrency.

The United States Securities and Exchange Commission (SEC) has also been increasing surveillance on ICO, halting a 600-million-US-dollar ICO on January 30.

The SEC said that together with the Commodity Futures Trading Commission, it will continue to crack down on illegal operations concerning cryptocurrency.

In Asia, South Korea issued an array of regulations regarding cryptocurrency, imposing a 24.4-percent income tax on cryptocurrecy exchanges and banning anonymous cryptocurrency trading.

Indonesia forbade domestic financial institutions conducting bitcoin payment businesses, while the United Arab Emirates warned investors on ICO investment.

In Europe, the French and German finance ministries have said they will promote global supervision on cryptocurrency at the G20 summit.

Meanwhile, British Lloyds Banking Group has barred people from purchasing cryptocurrency using credit cards.

However, Japan seems to welcome cryptocurrency investments despite recent hacking incidents.

But is it worthy to develop the technology and apply the innovation despite all the disadvantages?

Wang’s answer is no. He said governments need to take action against such transactions because traps will accompany opportunities, especially potential risks that could threaten national securities.

Separating cryptocurrency circulation from the traditional financial system should be the first step to avoid risks, he said, noting that legal cryptocurrencies issued by central banks may be a solution in the future.

(CGTN’s Yan Yunli also contributed to the story.)