Zhu Guangyao, the former deputy finance minister of China, has urged the government to reassess its stance on Bitcoin and cryptocurrencies. He emphasizes the necessity for thorough research into this technology, as reported by local news outlets.
Re-evaluating China’s Crypto Strategy
During his speech at the 2024 Tsinghua Wudaokou Chief Economist Forum on September 28, Zhu highlighted the risks associated with digital assets but underscored their increasing relevance in the global digital economy.
Recognizing Risks and Opportunities
Zhu acknowledged the potential detrimental effects of cryptocurrencies, especially concerning capital markets and their capacity to disrupt efforts aimed at anti-money laundering and counter-terrorism financing.
“It is important to understand the risks involved and the threats posed to capital markets. However, we must also examine international trends and policy changes as these are fundamental to the growth of the digital economy.”
Reflecting on the trajectory of cryptocurrencies, Zhu pointed out the U.S.’s long-standing apprehensions regarding the destabilizing implications of digital assets on global financial systems. For over a decade, U.S. policymakers regarded cryptocurrencies as serious threats to international anti-money laundering and anti-terrorism financing strategies, primarily due to their volatility.
Notably, Zhu mentioned a shift in U.S. policy in 2024, with former President Donald Trump integrating cryptocurrency into his election campaign and the U.S. Securities and Exchange Commission approving the listing of 11 Bitcoin ETFs on stock and futures markets.
Recently, Trump headlined the Bitcoin 2024 conference where he affirmed his commitment to promoting the crypto industry, warning that if the U.S. fails to lead in this space, other countries, including China, may surpass it.
Emerging Markets and Global Trends
Zhu also pointed to developments in emerging markets and BRICS countries such as Russia, South Africa, Brazil, and India, which are making strides in incorporating cryptocurrencies into their economies.
For instance, Russia has enacted new laws allowing its central bank to supervise the crypto sector and enabling companies to use cryptocurrencies for international transactions.
The forum underscored the importance for China to stay ahead of global shifts in cryptocurrency policies to maintain its competitiveness in the swiftly changing digital economy.
China’s Historical Stance on Bitcoin
China has a complicated history with Bitcoin, initiating restrictions as early as 2013, which barred financial institutions from participating in crypto transactions. However, this did not deter the rapid growth of the industry in the country.
As time progressed, the government intensified its crackdown. In 2017, it banned initial coin offerings (ICOs) and shut down domestic crypto exchanges. By 2021, China had implemented an outright ban on Bitcoin mining and trading, citing financial stability, fraud, and environmental concerns as key reasons. This comprehensive ban effectively halted all crypto transactions, prompting numerous crypto firms to relocate overseas.
Despite these restrictions, some underground trading persists via decentralized platforms, accumulating significant volumes. Additionally, Chinese mining pools continue to contribute substantially to the global Bitcoin hashrate, highlighting the ongoing interest in cryptocurrencies within the country despite official prohibitions.
