Huang Yiping, a former member of the Monetary Policy Committee at the People’s Bank of China, believes that the Chinese government should re-evaluate the sustainability of the cryptocurrency trading ban in the long term.
Yiping expressed his concerns about the future of fintech in China during a speech in December, as reported by Sina Finance on January 29.
According to Yiping, a permanent ban on cryptocurrencies may prevent the formal financial sector from taking advantage of potential benefits, including those related to blockchain and tokenization. He believes that these technologies are particularly beneficial to regulated financial institutions.
Yiping argues that although the ban may be advantageous in the short term, a careful examination of the long-term viability of cryptocurrencies is necessary. He also stressed the importance of creating a suitable regulatory framework for these digital assets, acknowledging that it will not be an easy task.
“There is no particularly good way to ensure stability and function as to how cryptocurrencies should be regulated, especially for a developing country, but ultimately an effective approach may still need to be found.”
Yiping statements come on the heels of increased efforts by the Chinese authorities to promote the use of the electronic Chinese yuan or e-CNY. The PBOC began including the CBDC in its money supply calculations in December, although it is still technically only being tested in many cities nationwide.
Despite advocating for a thorough review of the potential long-term benefits of cryptocurrencies, Yiping acknowledged the numerous risks involved, including those associated with Bitcoin.
According to Yiping, Bitcoin is more akin to a digital asset than a currency because it has no inherent value. He also claimed that a sizeable portion of Bitcoin transactions is connected to criminal activity, reiterating a prevalent anti-crypto narrative.
China has a complex history with decentralized cryptocurrencies. The government declared all cryptocurrency trading illegal in September 2021, citing its negative impact on the financial and economic system and its association with criminal activity.
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