Former Governor of the People’s Bank of China Publishes Article Concerning the Cryptocurrency Sector: Issues Warning

Former Governor of the People's Bank of China Zhou Xiaochuan wrote an extensive article on stablecoins and digital payment systems highlighting the limitations and potential risks of these ￰0￱ points highlighted in Zhou's article include: Decentralization isn’t suitable for every financial service: Zhou noted that the notion that “every service needs to be decentralized” is overblown

and that account-based centralized management systems are still operating ￰1￱ is not a sufficient criterion: The success of payment systems depends not only on technical advantages but also on factors such as security and regulatory ￰2￱ manipulation and investor risk: Stabilcoin argued that price and market manipulation in the stablecoin markets has not yet been prevented which magnifies the risk by attracting unqualified ￰3￱ demand problem: Zhou stated that stablecoins without sufficient usage may not be able to circulate effectively in the market so they cannot be issued even if a license is ￰4￱ advantage of existing payment systems: He reminded that the current system

especially in individual payments has already fallen to very low levels in terms of cost and the use of stablecoins will not be exempt from regulation costs such as KYC and ￰5￱ News: BREAKING NEWS: Binance Makes Weekend Altcoin Listing - Adds to Both Alpha and Futures Trading Zhou noted that stablecoin issuers tend to minimize costs and maximize issuance to gain wider acceptance an approach similar to central banks' power to “print money.” However

stablecoin issuers' lack of understanding of monetary policy and macroeconomic regulations brings with them the risks of uncontrolled issuance and high ￰6￱ regulations such as the GENIUS Act in the US and the Stablecoin Law in Hong Kong seek to solve these problems Zhou stated that current controls are inadequate and drew attention to the following issues: Reserve management: Where and by whom are the reserves of issued stablecoins held is a critical ￰7￱ have been past examples of this responsibility being ￰8￱ effect: Post-issuance transactions (deposits loans and collateralized transactions) also create a money supply multiplier for ￰9￱ poses a significant risk in the event of a liquidity ￰10￱ stated that price manipulation and transparency issues pose serious risks on cryptocurrency exchanges where stablecoins are heavily used

and that current regulations remain inadequate to address ￰11￱ also noted that fragmented trading opportunities through stablecoins and RWA (real-world assets) encourage young investors under the age of 18 to enter the market which is questionable from an investor protection perspective. *This is not investment ￰12￱ Reading: Former Governor of the People’s Bank of China Publishes Article Concerning the Cryptocurrency Sector: Issues Warning