The rapid adoption of cryptocurrencies like Bitcoin (BTC) poses a major challenge for the traditional financial system, an executive at the Chinese central bank has warned.

Wen Xinxiang, director of the payment and settlement section at the People's Banking company of Prc (PBoC), has expressed concerns over the growing popularity of cryptocurrencies and fiat-pegged stablecoins.

Pointing to Bitcoin's market value at present surpassing $800 billion and the total stablecoin market capitalization exceeding $120 billion, Wen outlined major risks associated with the crypto market at a payment and settlement forum on Friday, the Shanghai Securities Journal reported.

According to the official, one of the main challenges of crypto is that the industry is capable of operating separately from the traditional payment system supported past commercial banks and payment institutions. Cryptocurrencies besides cause issues for the payments services past banks, weakening the power of clearing organizations, Wen reportedly noted.

Wen too argued that the alleged anonymity of cryptocurrencies makes information technology an attractive tool for facilitating illegal transactions such as money laundering, urging for more measures for the traditional fiscal organization to compete with crypto:

"The challenge of virtual currency is huge. When the traditional financial system responds to the competition in the financial industry from big tech companies, it can also rely on traditional methods such as police and supervision to increase anti-monopoly efforts and strengthen personal privacy and information protection."

Related: New decentralized stablecoin in China targets international trade

Wen's remarks further reaffirm the anti-crypto stance of the Chinese government as Cathay has connected to crevice downward on crypto trading and mining this year, with local authorities shutting downwardly multiple mining farms and suspending crypto trading transactions.

PBoC deputy governor Fan Yifei previously expressed concerns over stablecoins in July, stating that the speed of the development in the private payments system was "very alarming." Despite the Chinese government'south skepticism on stablecoins, some local players are experimenting with decentralized stablecoins pegged to China'south central bank digital currency, the digital yuan.