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Chinese Official Warns Libra Could Assist Illegal Cross-Border Transfers

A senior Chinese regulator said on October 28, that Libra must abide by international foreign exchange regulations or “it should be banned.”

According to a report by Reuters, Sun Tianqi, the Chief Accountant of China’s State Administration of Foreign Exchange (SAFE), made the comments in an address to the Bund Summit in Shanghai.

Sun called upon emerging market governments to consider curbing Libra’s advance, especially if the stablecoin project would threaten a state’s capital controls or enable illegal transfers.

Sun said:

“Financial technology can promote the opening up, innovation and development of a country’s financial market, but it could also bring a lot of illegal cross-border financial activities. This should be a matter of great concern to all countries, especially emerging markets.” Sun Tianqi

Likewise, Sun’s concern lies with a foreign digital currency supplanting the yuan in domestic transactions, which would limit the state’s ability to enforce capital controls and foreign exchange management. 

Currently, the People’s Bank of China (PBoC) exerts downward pressure on the yuan, weakening it against other major currencies in order to boost exports.

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However, the comments are in line with public statements from other Chinese regulatory officials on the controversial Facebook-led initiative.

In July 2019, Zhou Xiaochuan, the former Governor of the People’s Bank of China said that Libra poses a threat to payment systems and national currencies. On the other hand, Wang Xin, the Head of the Research Bureau at the PBoC, said that Facebook’s venture has spurred the development of China’s “digital yuan,” which was initially proposed in 2014.

On October 25 (Friday), President Xi said to “seize the opportunity” afforded by blockchain.

Thus, a recent registration list published by the Cyberspace Administration of China shows that the development of blockchain applications in China is advancing quickly, with more than 500 enterprise projects already underway.

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