Bank of China’s former adviser calls on Beijing to reconsider crypto ban

The idea of ​​lifting the ban on cryptocurrency has begun to float in China as a former central bank official has called on the country to review its strict crypto restrictions.

Huang Yiping, former member of the monetary policy committee of the People’s Bank of China (PBoC), believes that the Chinese government should rethink whether the ban on cryptocurrency trading is sustainable in the long run.

Huang voiced 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 January 29.

The former official argued that a permanent ban on crypto could result in many lost opportunities for the formal financial system, including those related to blockchain and tokenization. Crypto-related technologies are “very valuable” to regulated financial systems, he stated, adding:

“Banning cryptocurrencies may be convenient in the short term, but whether it is sustainable in the long run deserves a thorough analysis,” Huang said. He also highlighted the importance of developing a proper regulatory framework for crypto, but admitted that it will not be an easy task. Huang said:

“There is no particularly good way to ensure stability and function in terms of how cryptocurrencies should be regulated, especially for a developing country, but ultimately an effective approach still needs to be found.”

Despite calling for a thorough analysis of the potential long-term benefits of crypto for China, Huang still emphasized 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 claimed that a significant proportion of Bitcoin transactions are related to illegal transactions.

Huang, now an economics professor at Peking University’s National School of Development, also admitted that China’s central bank digital currency has not achieved widespread adoption despite being launched years ago. He added that allowing private institutions to issue stablecoins based on the digital yuan remains a “very sensitive” issue, but the pros and cons are worth considering.

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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 the adoption of blockchain as a core for innovation in 2019. At the same time, the Chinese government has shown some hostility to crypto, and eventually banning virtually all crypto transactions in 2021.

Despite the ban, China has remained the second largest Bitcoin miner in the world as of January 2022, suggesting a large crypto community still exists in the country. According to official data, mainland China customers accounted for 8% of the collapsed crypto exchange FTX 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.