Virtual currencies like bitcoin are assets but bitcoin in itself does not have the fundamental attributes needed to be a currency that could meet modern economic development needs, a Chinese central bank adviser has said.
Sheng Songcheng, an adviser to the People’s Bank of China (PBOC), made the comments in an interview with financial magazine Yicai published late Thursday.
“Bitcoin does not have the fundamental attributes needed to be a currency as it is a string of code generated by complex algorithms… But I do not deny that virtual currencies have technical value and are a type of asset,” he said.
His comments come after the Chinese central bank increased scrutiny of the country’s bitcoin exchanges earlier this year, a move that prompted the companies to stop margin lending, introduce trading fees and issue rules to rein in users.
Many governments around the world are still mulling how to regulate and classify bitcoin, whose value surged in June to hit a record just shy of US$3,000. China has classified it as a “virtual good.”
Squaring in on bitcoin, Sheng said expectations that bitcoin supply would be capped in the year 2140 would make it difficult for it to become a medium of exchange that could meet modern economic development needs as money supply should be related to economic needs.
He also said that Chinese monetary authorities should study issuing a central bank virtual currency that it can regulate and run properly.