Former Chinese finance minister calls for closer study of cryptocurrency

At the 2024 Tsinghua PBC Chief Economist Forum, former Chinese Finance Minister Zhu Guangyao urged China to reassess its approach to the crypto industry.

He cited the evolving international stance on digital currencies, particularly in the United States, where the asset class has garnered political support from key figures such as US presidential candidate Donald Trump.

Policy change

In his speech, Zhu acknowledged the risks and challenges posed by cryptography, but emphasized the need for China to closely study global trends and policy adjustments.

“It has negative effects, and we must fully recognize its risks and damage to the capital market,” he said. “But we need to study the latest international changes and policy adjustments because it is a crucial aspect of the development of the digital economy,” he added.

The former minister reflected on the global evolution of digital currencies, noting that over the past decade, the United States has consistently viewed them as a major threat to international efforts to combat money laundering and terrorist financing. Its volatile nature has also been seen as a threat to the stability of global financial markets.

However, Zhu noted that his policy has undergone a change this year. He pointed to Donald Trump’s 2024 presidential campaign, which has openly embraced the asset, with the US politician publicly warning that “we have to embrace cryptocurrencies or China will replace us.”

He also noted the US Securities and Exchange Commission’s (SEC) approval of 11 Bitcoin exchange-traded funds (ETFs) earlier this year and the subsequent green-lighting of similar Ethereum products (ETH) despite the agency’s initial reluctance.

Zhu also mentioned that emerging economies, including BRICS nations such as Russia, South Africa, Brazil and India, are also taking steps to incorporate cryptocurrencies into their financial systems.

China’s Approach to Cryptography

China’s relationship with the crypto industry has been complex and restrictive, evolving annually as the government has taken an increasingly firm stance against digital assets.

It started in December 2013 when the People’s Bank of China (PBoC) and other regulatory bodies issued a notice banning banks from handling Bitcoin transactions.

In 2017, it stepped up its efforts by banning initial coin offerings (ICOs) in early September, deeming them illegal forms of public funding. Soon after, the PBoC ordered all cryptocurrency exchanges in the country to cease operations by the end of September, citing concerns about possible use in criminal activities such as drug trafficking and money laundering.

As a result, major exchanges such as Binance were forced to relocate, while traders increasingly turned to foreign platforms using VPNs. In 2021, the government stepped up its crackdown, banning crypto mining and declaring all crypto-related transactions illegal.

However, in recent times, Hong Kong, which is a semi-autonomous region of China, has increased its acceptance of crypto. Operating under the principle of “one country, two systems”, which allows it to maintain its own legal and economic systems, Hong Kong has established a clear regulatory framework for the industry and is actively courting global players in the sector to abolish it. roots in the city.

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