Key takeaways:
- Former PBoC Monetary Policy Committee member Huang Yiping recently expressed his fears about the prospects of technology in China in light of the country’s crypto ban.
- Huang’s caution emphasises the significance of taking into account cryptocurrency regulations’ long-term impacts, particularly in light of fast-advancing financial technologies.
While stepping up its endeavours to test and introduce its CBDC, China continues to impose a complete ban on all cryptocurrency-related operations. A former adviser to China’s central bank has suggested that Beijing should reassess its harsh cryptocurrency embargo, revealing light on an extended dialogue over the use of private digital currencies in China.
Between 2015 and 2018, Huang Yiping was a member of the Monetary Policy Committee at the People’s Bank of China. At the National School of Development at Peking University, he is currently a professor of finance and economics.
In a lecture in December, Huang expressed his worries about the state of fintech in China, according to a transcript that was made public by the regional financial website Sina Finance on December 29.
Huang recognised that the present restriction on cryptocurrency activities might be workable in the short term, but he stressed that the government should think about the viability of such policies over the long term.
Beijing issued a broad restriction on industry activity because it was worried about the usage of cryptocurrency for illegal purposes.
Huang cautioned that a blanket prohibition on items related to cryptocurrencies might lead to substantial missed opportunities in cutting-edge technology like blockchain, which are developing into “extremely valuable” elements of internationally regulated financial institutions.
He sees a tonne of potential in researching the “extremely valuable” blockchain technology. Huang urged a thorough examination of the possible long-term advantages of cryptocurrencies for China, but he also underlined that there are numerous hazards involved.
In particular for a developing country, he says, there is no particularly brilliant way to maintain stability and function as to how cryptocurrencies should be controlled, but eventually an effective strategy may still need to be established.
According to data from the Cambridge Centre for Alternative Finance (CCAF), during September 2021 to January 2022, about 20% of all bitcoin hash rates came from traffic coming from China. According to the CCAF, this strongly shows that there is a sizable underground mining sector in the nation, with miners growing more secure and satisfied with the security provided by local proxy services as the prohibition has taken effect.
The Chinese government outlawed all cryptocurrency-related operations in September 2021, stating that it had disturbed the nation’s economic and financial equilibrium and served as a haven for criminal activity.
