Bank of China ex-advisor calls Beijing to reconsider crypto ban

[Hydrogen]

The economist argued that the current crypto ban in China is beneficial in the short term, but big opportunities can be missed in the long run.

The idea of lifting the cryptocurrency ban has started floating in China as a former central bank official has called the country to review its stringent crypto restrictions.

Huang Yiping, a former member of the Monetary Policy Committee at the People’s Bank of China (PBoC), believes that the Chinese government should think again about 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 the local financial website Sina Finance on Jan. 29.

The former official argued that a permanent ban on crypto could result in many missed 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 practical in the short term, but whether it is sustainable in the long run deserves an in-depth analysis,” Huang stated. He also highlighted the importance of developing a proper regulatory framework for crypto, though admitting that it won’t be an easy task. Huang said:

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

Despite calling for an in-depth analysis of the potential long-term benefits of crypto for China, Huang still emphasized that there are many risks associated with cryptocurrencies like Bitcoin. 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 share of Bitcoin transactions is 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 failed to reach wide adoption despite being launched many years ago. He added that allowing private institutions to issue stablecoins based on the digital yuan remains a “very sensitive” question, but the pros and cons are worth considering.

China has been long known for its “blockchain, not Bitcoin” stance, with Chinese President Xi Jinping calling for 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, eventually banning virtually all crypto transactions in 2021.

Despite the ban, China has continued to be the second largest Bitcoin miner in the world as of January 2022, hinting at a large crypto community still existing 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 really banned individuals from possessing or trading crypto.

https://cointelegraph.com/news/bank-of-china-ex-advisor-calls-beijing-to-reconsider-crypto-ban

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Interesting points all around.

Despite the ban, China has continued to be the second largest Bitcoin miner in the world as of January 2022, hinting at a large crypto community still existing 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 really banned individuals from possessing or trading crypto.

With crypto emerging as the "legalize and tax it" version of legalizing cannabis of decades past. Could china's economy significantly benefit from approving and regulating crypto, rather than resorting to hardline policies more closely resembling outright bans?

In past years, we were bombarded with countless news articles claiming china would emerge as the next global superpower to dethrone the united states and takeover as the #1 nation in the world. Now that economic slowdown has encompassed the globe. Can china achieve its lofty ambitions, without harnessing emerging technologies like crypto to boost its economic potential and tax revenues? Could there be criticism made against china for handicapping themselves by outlawing things which might only give them an economic advantage over the long term?

As global debt climbs for nations of the world, everyone appears to be scrambling to harness new sources of capital, credit and liquidity. Crypto is emerging as one large global market and method for achieving these goals.

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[AverageGlabella]

ex advisor does not have any input into current decisions so I would not worry about him suggesting this. He is a ex advisor for a reason. But I do not know what China would gain from banning btc when they banned btc last time it was still being used and all they did was encourage people to break the law. Chinese people are oppressed enough with the great firewall of china and most friends I have that live there already use vpns to bypass the oppression so they are not the most law listening citizens because they are being oppressed in most areas of their life. If they ban it again I can see it encouraging people to use it more because of the oppression .

[Smartprofit]

ex advisor does not have any input into current decisions so I would not worry about him suggesting this. He is a ex advisor for a reason. But I do not know what China would gain from banning btc when they banned btc last time it was still being used and all they did was encourage people to break the law. Chinese people are oppressed enough with the great firewall of china and most friends I have that live there already use vpns to bypass the oppression so they are not the most law listening citizens because they are being oppressed in most areas of their life. If they ban it again I can see it encouraging people to use it more because of the oppression .

My country also has a lot of technological restrictions on the use of the Internet. 

In particular, the website Bitcointalk.org is blocked.  It can only be used with VPN and other similar technologies.  In addition, Internet services such as Instagram are blocked.  From my observation, most people put up with the restrictions and eventually stop using VPNs in order to access prohibited sites. 

The situation is aggravated by the fact that VPNs are also blocked and many of them cease to function.  In fact, this is a struggle between armor and projectile. 

You have to be a patient and purposeful person in order to fully continue to use the Internet, despite the bans and restrictions being introduced.

[jackg]

The prospect China has banned crypto to some people and hasn't banned it based on others' interpretations is a weird one. Did you notice the date was January 2022 too (not 2023)? I don't think it's still the case that a lot of crypto mining takes place in China.

You have to be a patient and purposeful person in order to fully continue to use the Internet, despite the bans and restrictions being introduced.

I am surprised there aren't underground groups that teach people how to do these things that aren't well known to the authorities. Similar to the sentiments of the OP, where I'm from it's fairly easy to find people dealing in things that are illegal (depending on the severity) also cannabis has often been called a gateway drug as it gives the user a contact to get stronger stuff from.

[Lucius]

With crypto emerging as the "legalize and tax it" version of legalizing cannabis of decades past. Could china's economy significantly benefit from approving and regulating crypto, rather than resorting to hardline policies more closely resembling outright bans?

In past years, we were bombarded with countless news articles claiming china would emerge as the next global superpower to dethrone the united states and takeover as the #1 nation in the world. Now that economic slowdown has encompassed the globe. Can china achieve its lofty ambitions, without harnessing emerging technologies like crypto to boost its economic potential and tax revenues? Could there be criticism made against china for handicapping themselves by outlawing things which might only give them an economic advantage over the long term?

I wouldn't be surprised if a beginner asks such questions, but haven't we already concluded dozens of times that China lost almost nothing by its decisions to ban crypto trading and mining? According to the latest data, the GDP in 2022 for China was slightly less than $15 trillion - and the question for you is how much would China profit if it had a monopoly on BTC mining and all CEXs were located in China? It seems to me that the amount is such that most members of the communist party would not even blink an eye if someone mentioned it.

The bottom line is that any policy shift towards cryptocurrencies does not change the outlook for the Chinese economy to any significant extent. I personally hope that they will stay true to their decisions, because Bitcoin only suffered from China, and we don't need a repeat of that story.

[bittraffic]

There were still lots of Chinese individuals recruiting crypto employees on LinkedIn. Despite the ban, yes Chinese are trading crypto.

This will really boost the prices of cryptocurrencies when they open the country for crypto as they did before. So far they were planning to make Hongkong a hub for blockchain developments as was stated in the news. It would be a waste to completely abandon the crypto industry when there are really good developers in the country that have started since, projects like NEO and Vechain are among the top 100.

[kryptqnick]

Apart from a noted fact that being a former official means not having impact on political decision-making, I wouldn't say he's even strongly in favor of changing the policy. He's being careful enough in his texts, possibly because of not wanting to be blamed for criticizing the official policy, but maybe he also wrote it to make it seem like the topic is complex, regardless of his own position.
In any case, I don't think this will lead China to revisiting crypto regulations, and I also don't believe that China needs the extra revenue from friendlier policies. It's doing very well economically, and it is focused on controlling the citizens politically. Decentralized pseudonymous currencies may be too much freedom for the authoritarian state to offer, not worth a bit extra in taxes.

[coupable]

A summary of what I understood from all that China is doing regarding cryptocurrencies is that it does not want to involve itself with it, since it is against citizens having untraceable assets.  Despite this, this does not prevent it from being one of the leading countries in mining Bitcoin, in addition to the fact that it certainly produces graphics cards for other types of mining.  It seems that China does not pay much attention to the issue and will continue to ignore it.

[Fortify]

Interesting points all around.

Despite the ban, China has continued to be the second largest Bitcoin miner in the world as of January 2022, hinting at a large crypto community still existing 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 really banned individuals from possessing or trading crypto.

With crypto emerging as the "legalize and tax it" version of legalizing cannabis of decades past. Could china's economy significantly benefit from approving and regulating crypto, rather than resorting to hardline policies more closely resembling outright bans?

In past years, we were bombarded with countless news articles claiming china would emerge as the next global superpower to dethrone the united states and takeover as the #1 nation in the world. Now that economic slowdown has encompassed the globe. Can china achieve its lofty ambitions, without harnessing emerging technologies like crypto to boost its economic potential and tax revenues? Could there be criticism made against china for handicapping themselves by outlawing things which might only give them an economic advantage over the long term?

As global debt climbs for nations of the world, everyone appears to be scrambling to harness new sources of capital, credit and liquidity. Crypto is emerging as one large global market and method for achieving these goals.

The Chinese government makes some strange policy decisions, often only to benefit party members at the expense of everyone else, but casting a look back they imposed this ban during a period of time when energy was getting more expensive and was heavily polluting. Miners were growing private profits for the few at the expense of public health and the ability for the wider public to access cheaper electricity. Then there is also the political side, where the ability to store funds outside the tentacles of the dictator Xi Jinping meant that people were less susceptible to pressure and could escape if things got too dangerous or express opinions they might otherwise have to hide.

[_act_]

China banned bitcoin but their citizens still use it as a property. Chinese government ban bitcoin mining and brought bitcoin mining hash rates to zero but China is now the second country with the highest bitcoin hash rates. China banned bitcoin several times but bitcoin got to all-time-high over and over after several ban. Without China, bitcoin can survive.

It would be better for Chinese government to rethink, they like centralized things like their own money, their own CBDC, their own apps for social media. If possible that China can live without the people outside of China, their government would have done that. Because bitcoin is decentralized, they do not support it, it would be good if they reconsider their wrong past decision.

[mk4]

Reversing the ban on crypto could be very beneficial for China even due to the fact alone that they're going to be able to harvest more money in taxes. On the monetary control/privacy side, it's not like China can't do their own chainalysis on their people. Pretty sure they can if they wanted to.

[Lucius]

Reversing the ban on crypto could be very beneficial for China even due to the fact alone that they're going to be able to harvest more money in taxes. On the monetary control/privacy side, it's not like China can't do their own chainalysis on their people. Pretty sure they can if they wanted to.

Everyone says that China would earn from taxation, but no one says how much? I will not repeat myself because I already wrote something about it in the previous post, but is it about $500 million or $5 billion and what significance would that have in the economy, which according to all forecasts will achieve significant growth this year, which will be measured in trillions.

It seems that after all these years, people do not understand that Bitcoin is a much bigger problem for China because of the idea it represents, than any financial benefit that could come from it. A country that censors the internet to an unprecedented extent will never allow its citizens to be financially independent in any way.

[Smartprofit]

The prospect China has banned crypto to some people and hasn't banned it based on others' interpretations is a weird one. Did you notice the date was January 2022 too (not 2023)? I don't think it's still the case that a lot of crypto mining takes place in China.

You have to be a patient and purposeful person in order to fully continue to use the Internet, despite the bans and restrictions being introduced.

I am surprised there aren't underground groups that teach people how to do these things that aren't well known to the authorities. Similar to the sentiments of the OP, where I'm from it's fairly easy to find people dealing in things that are illegal (depending on the severity) also cannabis has often been called a gateway drug as it gives the user a contact to get stronger stuff from.

Many people do not want to have any interaction with drug addicts, drug dealers, or drugs.  

In my country, the consumption of alcohol is a national tradition, but contact with the world of drugs is not encouraged.  People are not inclined to break the law or other social taboos and prohibitions.  

I cannot appreciate how law-abiding the Chinese are....

In any case, the official ban on cryptocurrencies limits the number of Chinese who are willing to use cryptocurrencies in everyday life.  

Therefore, the call to lift this ban, in my opinion, can only be welcomed.

[Gyfts]

Communist regimes don't do very well if a decentralized currency competes with their own. There isn't any incentive for China to reverse the ban. It would only allow their citizens to free themselves from the deadly grip of the CCP.

[avikz]

If that ex-advisor goes missing after some days, don't be surprised! These are quite common things in China.

I personally don't think the Chinese government would ever reconsider lifting the ban on cryptocurrencies. Anything de-centralized doesn't go well with the communist mindset. Moreover, the current Chinese government doesn't believe in human rights. So the chance for cryptos to become legal is pretty slim. Many advisors or consultants may feel differently than the government but they are mostly afraid of speaking their minds. Not sure what will happen to this person who spoke about it.

personally, I would not want Chinese people to get into cryptos again in big numbers. That will be a disaster for the market itself!

[Woodie]

Never thought someone from China could actually publicly speak about bitcoin/cryptocurrencies and vouch for it in a good way. And this statement coming from an X banker this does carry weight which is one part of the equation , the rest is up to others to echo this message which should help bitcoin grow when the ban is lifted thanks to the standby demand that awaits.

If that ex-advisor goes missing after some days, don't be surprised! These are quite common things in China.

My thoughts too and  someone was always going to stand up against such restrictions...

[Fiatless]

He is correct, the benefits of cryptocurrencies especially Bitcoin is greater than the disadvantages. China is not a democratic nation that is why we shouldn't expect much from this comments because the decision on the communist party definitely supercede the voice of the people. China might consider unbanning cryptocurrencies maybe if they want to help Russia and Iran to invade sanctions.

[Ryu_Ar1]

“Banning cryptocurrencies may be practical in the short term, but whether it is sustainable in the long run deserves an in-depth analysis,”

It is interesting to see this statement because maybe he is actually a little doubtful about the current prohibition conditions which will actually make them cornered in the end, but on the other hand actually in this case he is also afraid to argue harder because he could be seen as opposing the policies that have been implemented. currently doing.
China's strength is very large, especially its power in regulating the conditions of its country and we don't even know more information about them because it is closed from the news.
But looking back now, I actually think that there are still many people there who use bitcoin until now because it is impossible for an underground movement like them to completely destroy it.
On the other hand I wouldn't be surprised if they end up changing some of their policies regarding this ban as they have always done.

[dezoel]

He is correct, the benefits of cryptocurrencies especially Bitcoin is greater than the disadvantages. China is not a democratic nation that is why we shouldn't expect much from this comments because the decision on the communist party definitely supercede the voice of the people. China might consider unbanning cryptocurrencies maybe if they want to help Russia and Iran to invade sanctions.

Too bad that he said it late when he is already an ex-advisor so the chance for it to be accepted can still be slim but I think if already said this before then maybe BTC in China won't be banned. Regret is truly felt at the end. There might still be other ways for China to help Iran and Russia even without unbanning cryptocurrencies but I heard that Russia did already start using cryptos before, on the peak of their sanctions.

Maybe they use that for other countries because there is no way China can accept it but anyway apart from this news, there was also a news last time about the creation of an NFT marketplace in China. It's only surprising though when the status of cryptos in their country is still banned.

[AmoreJaz]

China banned bitcoin but their citizens still use it as a property. Chinese government ban bitcoin mining and brought bitcoin mining hash rates to zero but China is now the second country with the highest bitcoin hash rates. China banned bitcoin several times but bitcoin got to all-time-high over and over after several ban. Without China, bitcoin can survive.

It would be better for Chinese government to rethink, they like centralized things like their own money, their own CBDC, their own apps for social media. If possible that China can live without the people outside of China, their government would have done that. Because bitcoin is decentralized, they do not support it, it would be good if they reconsider their wrong past decision.

that is very true, now, they have seen that bitcoin market will survive even without their presence. i believe when they said to the world about banning the usage of crypto, they thought that btc market would collapse but then its impact was only short-lived and life goes on with crypto market.
i have the feeling that sooner or later, they will change their stance again on btc or crypto in general, they just don't want to admit that some of  their people need this market to survive.