Economist urges China to review its total ban on Bitcoin

Former member of the People’s Bank of China’s Monetary Policy Committee, Huang Yiping, urged the authorities to consider the long-term consequences of banning cryptocurrency. This was reported by South China Morning Post.

According to Huang, who is currently a professor of economics at the National School of Development of Peking University, blockchain technologies are “very valuable” to financial systems.

“A ban on cryptocurrencies may be practical in the short term, but the question of whether it will be sustainable in the long term deserves careful analysis,” he said.

The expert stressed the importance of developing an appropriate regulatory framework for cryptocurrencies.

“There is no particularly good way to ensure stability and functioning in terms of how cryptocurrencies should be regulated, especially for a developing country, but ultimately an effective approach may need to be found,” the economist noted.

At the same time, he agreed that cryptocurrencies, notably Bitcoin, carry a range of risks:

“Bitcoin is more like a digital asset than a currency because it lacks intrinsic value. And a substantial portion of Bitcoin transactions is linked to illicit activity.”

Huang noted that the digital yuan has yet to gain broad adoption. The possibility of allowing private institutions to issue stablecoins backed by the national digital currency, he said, remains “a very delicate” issue.

At the end of 2022, the PBC included CBDC in the monetary base calculation. At that time in circulation was 13,62 млрд e-CNY (~$2 млрд), representing 0.13% of the total.

Earlier, in September 2021, the People’s Bank of China, in a joint statement with nine state ministries, classified cryptocurrency operations as illegal financial activity.

In February 2022, China tightened criminal liability for illicit fundraising in digital assets. At the same time, the Shanghai High Court recognised Bitcoin as a virtual asset with economic value protected by law.

According to former BitMEX CEO Arthur Hayes, China intends to return to the digital-assets industry via Hong Kong.