Ali Sherief
A former senior finance official in China is calling on the government to reconsider its strict cryptocurrency ban, as the U.S. adopts more favorable policies toward digital assets. Zhu Guangyao, the former official, highlighted the potential for digital assets to contribute to China’s digital economy during a recent forum in Beijing, according to the South China Morning Post.
China’s relationship with cryptocurrency has been marked by ongoing tensions, beginning with the government’s crackdown on initial coin offerings (ICOs) and crypto exchanges in 2017. This marked a significant departure from the growing global interest in digital currencies at the time. The crackdown further intensified in 2021 when the government banned Bitcoin mining and declared all crypto-related activities illegal.
Despite this harsh stance, Zhu suggests that the outright ban may not be the best course of action. He argues that while cryptocurrencies pose certain risks, such as volatility and potential misuse for illegal activities, these issues could be mitigated through regulation rather than total prohibition. According to Zhu, the ban has driven much of the trading activity underground, creating an unregulated market that still thrives in the shadows.
Over the years, China’s strict measures against cryptocurrency have sparked both internal and international debate. Critics point out that this hardline approach may have led to missed economic opportunities, particularly as other countries, like the U.S., shift towards more supportive stances on digital assets. For instance, Hong Kong is pursuing a more open strategy, seeking to establish itself as a global hub for digital assets with Beijing’s tacit approval. Earlier this year, Hong Kong approved crypto exchange-traded funds (ETFs), signaling a growing divide in China’s regional policies toward cryptocurrency.
Zhu’s remarks also come in the wake of former U.S. President Donald Trump advocating for a pro-crypto stance to counter China’s influence. His perspective adds to growing concerns within China that the country could be left behind if it continues its hardline ban, especially as cryptocurrencies gain traction worldwide. Notably, Chinese economist Wang Yang and former People’s Bank of China policymaker Huang Yiping have both voiced their concerns that the mining ban was “unwise,” warning that it has driven opportunities abroad, particularly to the U.S.
As China once again finds itself at a crossroads regarding cryptocurrency ownership and regulation, Zhu’s comments revive old tensions and debates. Should the country stick to its restrictive policies or join the global race for digital asset dominance? China’s next move will determine its role in the evolving landscape of digital finance.
