Former Bank of China adviser calls on Beijing to reconsider cryptocurrency ban

The idea of ​​lifting the cryptocurrency ban started floating in China when 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 the Chinese government should rethink the sustainability of the cryptocurrency trading ban in the long run.

Huang expressed his concerns about the future of fintech in China in a speech in December, according to a transcript published by local financial website Sina Finance on Jan. 29.

The former official argued that a permanent ban on cryptocurrencies could result in many missed opportunities for the formal 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 a thorough analysis,” Huang said. She also stressed the importance of developing a proper regulatory framework for cryptocurrencies, while admitting that it will not be an easy task. huan said:

“There is no particularly good way to ensure stability and functioning on how cryptocurrencies should be regulated, especially for a developing country, but an effective approach may still ultimately need to be found.”

While calling for an in-depth analysis of the potential long-term benefits of cryptocurrencies for China, Huang still stressed that there are many risks associated with cryptocurrencies such as Bitcoin (BTC). Huang argued that Bitcoin is more like a digital asset rather than a currency because it lacks intrinsic value. Echoing a common anti-crypto narrative, he also said that a significant share of Bitcoin transactions are related to illegal transactions.

Huang, now a professor of economics at Peking University’s National School of Development, also admitted that China’s central bank digital currency (CBDC) has failed to achieve widespread adoption despite being launched many years ago. He added that allowing private institutions to issue stablecoins based on the digital yuan remains a “very delicate” issue, but the pros and cons are worth considering.

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China has long been known for its “blockchain, not Bitcoin” stance, with Chinese President Xi Jinping calling on the country to accelerate adoption of blockchain as a core for innovation in 2019. At the same time, the government China has shown some hostility towards crypto, eventually banning virtually all crypto transactions in 2021.

Despite the ban, China continued to be the second largest Bitcoin miner in the world as of January 2022, suggesting a large cryptocurrency community still exists in the country. According to official data, customers from mainland China accounted for 8% of the collapsed cryptocurrency exchange FTX despite the country’s ban on cryptocurrency trading.

Some local cryptocurrency enthusiasts even believe that China has never really banned people from owning or trading cryptocurrencies.