Former Chinese Finance Minister Urges Caution on Crypto Amid US Boom
The significant shift in the US' stance on cryptocurrencies, particularly with the approval of spot Bitcoin ETFs, has not gone unnoticed by China.
Speaking at the 2024 Tsinghua Wudaokou Chief Economists Forum in Beijing, Former Chinese finance minister Lou Jiwei expressed concerns about the potential risks posed by cryptocurrencies to financial stability, including their volatility and susceptibility to illicit activities, Cointelegraph reported on Sunday, citing a transcript of the speech published by Sina Finance.
In his address, Lou highlighted the implications of the US shift towards cryptocurrencies on global markets and urged Chinese policymakers to conduct a thorough study of the associated risks and innovations.
Despite China's strict ban on Bitcoin mining and trading, it continues to hold a significant share of the global Bitcoin mining network – up to 55% by some estimates.
However, this dominance has been shifting towards US mining firms, particularly following China's 2021 ban on financial institutions from using cryptocurrencies and its vow to "crack down" on mining. US institutional investors are also aiming to capitalize on the growing acceptance of cryptocurrencies,
The call for a reassessment of China's crypto policy echoes similar sentiments expressed by other prominent figures. Former Chinese finance minister Zhu Guangyao, for example, emphasized the need for China to stay updated on global trends and consider the potential benefits of embracing cryptocurrencies.
While China's stance on cryptocurrencies remains cautious, there have been signs of a gradual shift towards a more open approach. The launch of Bitcoin ETFs in Hong Kong, for instance, represents a small but significant step in this direction.
The Chinese government has publicly denied owning any Bitcoin. However, there have been unconfirmed reports suggesting that the government may have acquired Bitcoin through various means, such as seizing it from criminals or participating in mining operations. Data from Dropstab shows estimated Chinese government holdings of 194,000 BTC, or $12.5 billion at current market value.