China’s former finance vice minister, Zhu Guangya, has urged the country to keep studying cryptocurrencies as the United States adopts a more favorable stance toward digital assets. Speaking at this year’s Tsinghua PBOC Chief Economists Forum, Zhu emphasized the importance of understanding the global development of cryptocurrencies, even in light of the risks and challenges associated with them.
Zhu, who served in the role from 2010 to 2018, noted that cryptos play a vital role in the growth of digital economies and must be explored thoroughly. In his speech, Zhu noted that the U.S. has undergone a significant change in its approach to cryptocurrencies, driven in part by institutional interest. Initially, the U.S. viewed crypto with suspicion, especially because it was linked to money laundering and the funding of terrorism in global markets.
However, recent policy changes, including the approval of Ether and Bitcoin spot exchange-traded funds (ETFs), have led to a more widespread acceptance of crypto in the U.S. financial system.
Zhu also noted that Donald Trump, who is currently running for president as a Republican candidate, has made cryptocurrency a focal point in his campaign. According to Trump, the United States should adopt cryptocurrencies to keep up with China in terms of financial and technological innovation.
Additionally, Zhu stressed the importance of monitoring how emerging markets and the BRICS countries — Brazil, Russia, India, China and South Africa — are integrating cryptocurrency into their economies. For instance, Russia has introduced laws that allow the central bank to oversee the sector and enable businesses to settle international transactions using crypto.
China, on the other hand, has taken a stricter approach. The country first banned banking institutions from engaging with cryptocurrencies in 2013, putting limits on Bitcoin. Despite this, the crypto industry continued to grow within China.
Over the next several years, the Chinese government increased its efforts to curb crypto activities, outlawing initial coin offerings (ICOs) in 2018 and closing down local cryptocurrency exchanges. In 2021, China went a step further by enacting a complete ban on BTC trading and mining, citing worries about fraud, unstable financial markets and negative environmental effects.
While the Chinese government’s ban on cryptocurrency transactions remained in place, some underground trading persists through decentralized sites. In fact, despite the restrictions, Chinese mining pools continue to play a significant role in the global Bitcoin network, contributing to a large portion of its hashrate.
Currently, the government is focused on introducing stimulus measures to revive its slowing economy. However, interest in crypto remains strong, with ongoing debates about the role it might play in the country’s financial future.
The inroads that companies such as Bit Mining Ltd. (NYSE: BTCM) are making into the investing public could also motivate China to explore this avenue of capital mobilization as its economy struggles to find its footing on a growth trajectory after the recent slump of the housing market in the country.
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