The idea of lifting the cryptocurrency ban has begun to float in China as a former central bank official has called on the country to review strict crypto restrictions.
Huang Yiping, a former member of the monetary policy committee at the People’s Bank of China (PBoC), believes that the Chinese government should rethink whether the ban on cryptocurrency trading can be sustained in the long term.
Huang expressed concern about the future of fintech in China in a speech in December, according to a transcript published by local financial website Sina Finance on January 29.
The former official stated that a permanent ban on crypto could lead to many missed opportunities for the formal financial system, including those related to blockchain and tokenization. Crypto-related technologies are “very valuable” to the regulated financial system, he said, adding:
“Banning cryptocurrencies may be practical in the short term, but whether it is sustainable in the long term requires in-depth analysis,” Huang said. He also highlighted the importance of developing a proper regulatory framework for crypto, although admitted that it will not be an easy task. Huang said:
“There is no good way to ensure the stability and functionality of how cryptocurrencies should be regulated, especially for developing countries, but ultimately an effective approach still needs to be found.”
Despite calling for an in-depth analysis of the long-term benefits of crypto for China, Huang still emphasized that there are many risks associated with cryptocurrencies like Bitcoin (BTC). Huang said that Bitcoin is more like a digital asset than a currency because it has no intrinsic value. Expanding on the common anti-crypto narrative, they also claim that a significant portion of Bitcoin transactions are related to illegal transactions.
Huang, now a professor of economics at Peking University’s School of National Development, also admitted that China’s central bank’s digital currency (CBDC) has failed to gain adoption despite its launch several years ago. He added that the possibility of allowing private institutions to issue digital yuan-based stablecoins remains a “very sensitive” question, but the pros and cons should be considered.
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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 blockchain as a key to innovation in 2019. At the same time, the Chinese government has shown some hostility towards crypto, eventually banning almost all of them. crypto transactions in 2021.
Despite the ban, China continues to be the second largest Bitcoin miner in the world as of January 2022, showing the large crypto community that still exists in the country. According to official data, Chinese mainland customers accounted for 8% of the crypto exchange FTX fell despite the country’s ban on crypto trading.
Some local crypto enthusiasts even believe that China has never banned individuals from owning or trading crypto.