‘Stateless digital tokens like bitcoin not legal currencies’

SHANGHAI: A senior executive at China’s state-backed Internet finance body said yesterday “stateless” digital tokens such as bitcoin pose risks as they can be used for illegal actions, and rules are needed to support the development of “legal” digital currencies.

The comments came a day after one China bitcoin platform said it would close on September 30 and a few hours before a second platform announced it was stopping operations as well.

Li Lihui, a senior official at the National Internet Finance Association of China and a former president of the Bank of China, also told a conference, here, that global regulators should work together to supervise cryptocurrencies.

His comments came as Beijing cracks down on the cryptocurrency business to contain risks as consumers pile into a highly risky market that’s grown rapidly this year.

BTCChina, a major Chinese bitcoin exchange, said on Thursday it would stop all trading from September 30.

That sparked a slide in the value of the cryptocurrency, leaving it more than 30 per cent below the record high of nearly US$5,000 (RM20,947) on September 2.

ViaBTC, a smaller bitcoin exchange, yesterday became the second to announce its closure at the end of this month.

Some users of China’s Twitter-like Weibo platform said yesterday they used the price fall to buy more bitcoin to trade overseas, while others said they were withdrawing their bitcoin or cash from trade.

Li said “digital tokens like bitcoin, ethereum that are stateless, do not have sovereign endorsement, a qualified issuing body or a country’s trust, are not legal currencies and should not be spoken of as digital currencies”.

The state-backed Internet finance body was set up by the central bank and its members include banks, brokerages, funds and consumer finance companies.

On Wednesday, it urged members to abide by laws and not deal in cryptocurrencies. Reuters