China has long been known for its "blockchain, not Bitcoin" stance
Additionally, the Chinese government has shown some hostility towards cryptocurrencies.
The concept of removing the restriction on cryptocurrencies has begun to circulate in China as a former central bank official has contacted the nation to reconsider its harsh crypto regulations.
Former member of the People's Bank of China (PBoC) Monetary Policy Committee Huang Yiping thinks that the Chinese government should reconsider whether the ban on cryptocurrency trading is long-term viable.
A copy of Huang's speech from December, which was made public by the regional financial website Sina Finance on January 29, revealed his doubts about the future of fintech in China.
A permanent ban on cryptocurrencies, according to the former official, might prevent the formal financial sector from taking advantage of many opportunities, including those involving blockchain and tokenization. He added: "Crypto-related technologies are extremely helpful" to regulated financial systems.
In the short term, banning cryptocurrencies might make sense, but an in-depth review of their sustainability over the long term is necessary, according to Huang. He also emphasized the significance of creating an appropriate regulatory framework for cryptocurrencies, while also acknowledging that it won't be simple. Huang says
“There isn't a particularly ideal way to ensure stability and functionality when it comes to how cryptocurrencies should be controlled, especially for a developing nation, but in the end, an efficient strategy may still need to be Discovered.”
Huang noted that there are various risks involved with cryptocurrencies like Bitcoin despite advocating for a thorough analysis of the possible long-term benefits of crypto for China. Due to its lack of fundamental worth, according to Huang, Bitcoin is more similar to a digital asset than a kind of money. He also asserted, repeating a frequent anti-crypto narrative, that a sizable portion of Bitcoin transactions is connected to criminal activity.
Although it was established a number of years ago, Huang, an economics professor at Peking University's National School of Development, also recognized that the use of the digital currency issued by China's central bank has not been widespread. The advantages and disadvantages should be considered even though the issue of allowing private companies to create stablecoins based on the digital yuan is still "very delicate.
For years, China has been known for its "blockchain, not Bitcoin" stance. In 2019, Chinese President Xi Jinping called for the government to promote the use of blockchain as the basis for innovation. The Chinese government has also expressed some hostility toward cryptocurrencies, and in 2021 it will essentially ban all cryptocurrency transactions.
Despite the ban, China was still the world's second-largest Bitcoin miner in January 2022, indicating that there is still a significant crypto ecosystem in the country. Despite China's ban on cryptocurrency trading, government data shows that Chinese consumers made up 8% of the bankrupt cryptocurrency exchange FTX.
Some local cryptocurrency enthusiasts even argue that the possession or exchange of cryptocurrencies has never been formally prohibited in China.
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