The idea of lifting a cryptocurrency ban started in China as a former central bank official called on the country to review its stringent restrictions on cryptocurrencies.
Huang Yiping, a former member of the Monetary Policy Committee of the People’s Bank of China (PBoC), believes that the Chinese government should think again about whether the ban on cryptocurrency trading is sustainable in the long run.
Huang expressed concerns about the future of fintech in China in a speech in December, according to a transcript published Jan. 29 by local financial website Sina Finance.
The former official argued that a permanent ban on cryptocurrencies could result in many opportunities being missed for the formal financial system, including those related to blockchain and tokenization. He said that cryptocurrency-related technologies are “of great value” to regulated financial systems, adding:
Huang stated that “banning cryptocurrencies may be practical in the short term, but whether they are sustainable in the long term deserves an in-depth analysis.” He also highlighted the importance of developing an adequate regulatory framework for cryptocurrencies, though he admitted that it would not be an easy task. Huang said:
“There is no particularly good way to ensure stability and action in terms of how to regulate cryptocurrencies, especially for a developing country, but in the end an effective approach may still be necessary.”
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Despite calling for an in-depth analysis of the potential long-term benefits of cryptocurrency for China, Huang still maintains that there are many risks associated with cryptocurrencies such as Bitcoin.
. Huang argued that bitcoin is more like a digital asset than a currency because it lacks intrinsic value. Echoing a popular anti-crypto narrative, he also claimed that a large share of Bitcoin transactions are linked to illegal transactions.
Huang, now a professor of economics at the National School of Development at Peking University, admitted that the Chinese central bank digital currency has failed to reach wide adoption despite its launch many years ago. He added that allowing private institutions to issue stablecoins based on the digital yuan remains a “very sensitive” question, but the pros and cons are worth examining.
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China has long been known for its “blockchain, not Bitcoin” attitude, with Chinese President Xi Jinping calling on the country to accelerate adoption of the blockchain as a basis for innovation in 2019. Meanwhile, the Chinese government showed some hostility to crypto, eventually blocking all cryptocurrency transactions. Crypto is almost in 2021.
Despite the ban, China continues to be the second largest bitcoin miner in the world as of January 2022, indicating a large crypto community still exists in the country. According to official data, mainland Chinese customers accounted for 8% of collapsed cryptocurrency exchange FTX despite the country’s ban on digital currency trading.
Some domestic cryptocurrency enthusiasts believe that China has never banned individuals from owning or trading cryptocurrencies.