The People’s Bank of China (PBoC) has proposed to start tracking activity involving NFTs and the metaverse, as an initiative to reduce crypto-related crimes. Such plans were hinted at by Gou Wenjun, the director of the Anti-Money Laundering unit (AML) at the PBoC, whilst speaking at the 2021 First Lujiazui National Financial Security Summit in late November.

At the summit, Wenjun issued concern about leaving new trends of the crypto ecosystem unregulated. Included in such ‘trends’ are NFTs and the metaverse, which, whilst Wenjun appreciates the benefits that they can bring to the privacy and accumulation of people’s wealth, he points out that their isolated nature means that they can also be used as tools for illicit practices, such as tax evasion and money laundering.

When proposing a plan that caters to the evolution of virtual assets, Wenjun said China must “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.”

In addition, Wenjun stated that China should improve the system that monitors and analyses digital asset transactions. A suggestion he made was that banks and other payment services should ensure that an authenticated name can be attributed to the sender and receiver within a crypto transaction.

To do so, Wenjun proposes that technologies such as AI and machine learning should be more heavily applied to the problem. Through such heavy applications, Wenjun claims that the systems that monitor and detect crypto-related crimes will be improved, and that the implementation of ‘digital asset transaction traceability and scene tracking systems’ will be more effective.

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