China’s crackdown on cryptocurrency is now expanding into the nonfungible tokens (NFTs) and the metaverse. These sentiments have been implied by an executive at the People’s Bank of China (PBoC). While speaking at the national financial security summit, the director of the Anti-Money Laundering (AML) unit at the PBoC, Gou Wenjun, highlighted these issues.
Wenjun insisted on the risks associated with leaving new trends of the crypto ecosystem, including NFTs and the metaverse, unregulated. This means that these new sectors of the digital economy are in the crosshairs of the PBoC that aims to track them with AML tools.
He alleged that, while users would go into the digital assets sector for privacy and wealth appreciation, they are also exposed to criminals that use them for illegal purposes like tax evasion and money laundering.
The rapid-paced innovation of the crypto sector needs higher requirements in terms of risk supervision and governance, as explained by the AML head. He added that the isolated nature of NFTs, cryptos, and metaverse-based items from the real world might be used as a money-laundering tool.
While suggesting an objective review of the evolution of virtual assets and the creation of underlying technologies, Gou proposed:
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“To clarify the division of supervisory responsibilities, improve the transparency of virtual assets, and explore the use of supervisory sandboxes to study and judge the essence and nature of virtual assets.”
China Aims To Regulate NFTs And Metaverse
As the next step, he said that China needs to strengthen the monitoring and analysis of all digital asset transactions. The country’s banks and all payment services that offer fiat-to-crypto gateways must authenticate receivers and senders with their real names while enhancing the ability to identify any suspicious transactions that may come up.
The People’s Bank of China official said that the solution lies with improving the application that comes with new technologies and creating a digital asset transaction traceability and scene tracking system. Such a system might apply machine learning, artificial intelligence, and other technologies to label accounts that transact with any flagged and probed addresses.
Finally, Gou said that PBoC is open to enhancing cooperation among financial intelligence agencies globally to create an international coalition to combat cryptocurrency-related crimes:
“The Anti-Money Laundering Center will continue to deepen information sharing and co-investigation cooperation with 60 overseas financial intelligence agencies.”