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Chinese Central Bank: Ethereum is Moving Toward the Right Direction

Chinese Central Bank: Ethereum is Moving Toward the Right Direction

Chinese Central Bank: Ethereum is Moving Toward the Right Direction

​Yao Qian, Deputy Director of the Science and Technology Department at People’s Bank of China (PBoC), recently expressed his concerns in regard to the unregulated initial coin offering (ICO) market. However, Qian believes Ethereum, the core infrastructure and blockchain protocol used by companies to conduct ICOs is moving toward the right direction.

At a press event, Qian emphasized the ability of the Ethereum blockchain protocol to process smart contracts and as a result handle autonomous operations. In fact, the DAO, decentralized autonomous organization, was the first company to run completely in a decentralized manner without the existence of a central entity.

In many ways, the DAO is the killer application of Ethereum, similar to how digital currency and digital gold are the two killer applications of bitcoin and ICO is a crucial component of the DAO because it grants companies a way to raise an immense amount of capital to fund operations without the involvement of intermediaries.

Central banks and government agencies including the PBoC are beginning to show their concerns toward the ICO market due to the decentralized method of raising investment. ICOs provide opportunities for anyone within the cryptocurrency community to invest in a company without being an accredited and verified investor.

While Qian and other officials of the PBoC believe in the potential of Ethereum and its smart contract technology which could potentially revolutionize some of the largest sectors including finance, technology and insurance, Qian noted that the market needs to be regulated in thee near future.

Speaking of Ethereum’s application and its ability to settle operations efficiently in a transparent ecosystem, Qian explained:

“You can open a real intelligent business application. Because of this, smart contract technology is in rapid development.”

More to that, the PBoC and the Chinese government is planning on implementing a similar approach to that of the UK government. Over the past few years, the Financial Conduct Authority of UK have focused on building a regulatory sandbox or platform for fintech companies and service providers.

The PBoC intends to provide a similar ecosystem to ensure that both Ethereum app developers and companies running iCOs on top of the Ethereum protocol understand the basic regulatory requirements of China.

On May 22, Vinay Gupta Introduces Etheruem's Smart Contract Model to European Parliament Vinay Gupta, the release coordinator for Ethereum, proposed a concept like the PBoC’s during his presentation to the European Commission. Gupta explained that governments could create a set of rules or regulations and incorporate them into smart contracts so that app developers will be able to see if their apps are fully compliant with local regulations.

“The thing which would be most useful in all of this is if we had mechanical representations of law it would allow people to figure out whether what they wanted to do is compliant or not compliant very cheaply. This is an enormously powerful new growth area and the more work that could be done on creating software definitions of law that would allow people to automatically check when their programs are compliant, the better the future will be,” said Gupta.

Author : Joseph Young

Joseph Young is a finance and tech journalist based in Hong Kong. He has worked with leading media and news agencies in the technology and finance industries, offering exclusive content, interviews, insights and analysis of cryptocurrencies, innovative and futuristic technologies.

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