The People’s Bank of China (PBOC), a former adviser to the Chinese central bank, called on the Chinese government to reassess its cryptocurrency ban,
Huang Yiping served as an official of the Monetary Policy Committee of the People’s Bank of China from 2015 to 2018 and is currently a professor of finance and economics at the National School of Development of Peking University.
While acknowledging that a cryptocurrency ban in China may be realistic for now, the former central bank adviser stressed that the government should consider whether such policies are sustainable in the long run. He warned that a permanent ban on crypto-related products could result in missed opportunities for technologies such as blockchain, which are “very valuable” to the financial system.
In September 2021, the Chinese government outlawed all cryptocurrency activities, claiming that cryptocurrencies have disrupted the country’s economic and financial order while facilitating illegal activities and crimes.
Despite the ongoing crackdown by the Chinese government, there are still a considerable number of cryptocurrency investors from China. According to data from blockchain analytics firm Chainalysis, China is among the 10 countries with the highest rates of crypto adoption. In addition, FTX’s bankruptcy filing in November last year showed that mainland users accounted for 8% of the 5 million active users before the collapse.
Additionally, crypto mining operations in China have increased. According to data from the Cambridge Center for Alternative Finance (CCAF), between September 2021 and January 2022, traffic from China accounted for approximately 20% of Bitcoin’s total hashrate. The center explained:
“It shows that a lot of underground mining has developed on the mainland… With the ban and time going on, the underground miners seem to have become more confident and seem satisfied. Satisfied with the protection provided by local agency services.”
Huang noted that the PBOC is working hard to promote the adoption of a central bank digital currency (CBDC). Although the digital yuan, or e-renminbi, is still in the experimental stage, the central bank has started using the digital currency as part of the money supply in December last year. However, Xie Ping, the former head of the research department of the People’s Bank of China, recently stated that the use of CBDC in China is “low” and “very inactive.”
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