The economist argued that the current cryptocurrency ban in China is a short-term benefit, but in the long term, big opportunities could be missed.
The idea of lifting the ban on cryptocurrencies started floating around in China after a former central bank official called for the country to review its strict restrictions on cryptocurrencies.
Huang Yiping, a former member of the Monetary Policy Committee of the People’s Bank of China (PBoC), believes the Chinese government should reconsider whether the ban on cryptocurrency trading will continue indefinitely.
Huang expressed concerns about the future of fintech in China in a speech in December, local financial website Sina Finance reported on Jan. 29. in the published transcript.
The former official argued that a permanent ban on cryptocurrencies could lead to a number of missed opportunities for the official financial system, including those related to blockchain and tokenization. Cryptocurrency-related technologies are “very valuable” to regulated financial systems, he said, adding:
“Banning cryptocurrencies may be practical in the short term, but whether it is sustainable in the long term deserves detailed analysis,” Huang said. He also emphasized the importance of establishing a proper regulatory framework for cryptocurrencies, although he acknowledged that this would not be an easy task. Huang said:
“There is no particularly good way to ensure the stability and functionality of how cryptocurrencies should be regulated, especially in developing countries, but ultimately an effective approach may still need to be found.”
While calling for a thorough analysis of the potential long-term benefits of cryptocurrencies for China, Huang still emphasized that there are many risks associated with cryptocurrencies such as Bitcoin.
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. . . . Huang said Bitcoin is more like a digital asset than money because it has no intrinsic value. Echoing the usual anti-crypto-currency narrative, he also pointed out that a significant portion of Bitcoin transactions involve illegal transactions.
Huang, now a professor of economics at Peking University’s National Development School, also acknowledged that China’s central bank’s digital currency has not been widely adopted despite its introduction several years ago before this time. He added that allowing private institutions to issue stablecoins based on the digital yuan remains a “very sensitive” issue, but the pros and cons should be considered.
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China has long been known for its “blockchain over Bitcoin” stance, with Chinese President Xi Jinping urging the country to accelerate blockchain as the backbone of innovation in 2019. reception. At the same time, the Chinese government showed some hostility. to cryptocurrency, which has banned all cryptocurrency transactions in 2021.
Despite the ban, in 2022 month of January. China continues to be the second largest Bitcoin miner in the world, indicating that there is still a large cryptocurrency community in the country. Mainland Chinese customers accounted for 8% of the failed cryptocurrency exchange FTX, despite the country’s ban on cryptocurrency trading, according to official data.
Some local crypto enthusiasts even believe that China has never banned individuals from owning or trading cryptocurrencies.
