Top China regulator warns against ‘mythologising’ blockchain technology

A top Chinese regulator has acknowledged the innovative aspects of blockchain but warned against “mythologising” the technology behind cryptocurrencies, echoing the government’s mixed feelings about the booming but shadowy sector.

“We all think blockchain is an innovation with significant meaning – correct. But we shouldn’t mythologise blockchain,” said Fan Wenzhong, head of the international department of the China Banking and Insurance Regulatory Commission, during a fintech summit in Shanghai over the weekend.

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Speaking at the 5th Fintech Bund Summit on July 8, Fan noted that it’s difficult to bill blockchain as a “revolution” because the underlying idea – multi-entry bookkeeping – has been around for centuries.

“Decentralisation is not a new trend but a loop, because the earliest human transactions were without central authorities,” he said, according to a transcript from the event organisers.

Blockchain is a decentralised, secured public ledger of data transactions, mostly used by cryptocurrencies such as bitcoin.

Beijing has vowed to take a lead in developing blockchain technology but isn’t so enthusiastic about cryptocurrencies and the potential risk they pose to financial stability. The government closed down all local crypto exchanges last September and subsequently cracked down on crypto mining, the process of creating new crypto coins.

Fan’s remarks echo the official government stance. “Blockchain is a useful innovation but that doesn’t mean cryptocurrencies, which blockchain has given rise to, are necessarily useful,” he said, warning against illegal fundraising under the cover of blockchain projects.

By the end of May this year, the authorities had blocked domestic access to a total of 110 crypto exchanges overseas, according to state news agency Xinhua, citing the Chinese central bank. In recent years, police have looked into around 300 criminal cases related to cryptocurrencies, Xinhua said.