Huang Yiping, a former monetary policy member of the People’s Bank Of China (PBoC), has expressed concerns about China missing out on financial development opportunities following the nation’s ban on cryptocurrencies.
Cryptocurrency adoption linked to development opportunities, says ex-PBoC member
While the PBoC had reasons to ban virtual currency activities, Yiping notes that the central bank should have considered long-term benefits, digging deeper to realize a sustainable, workable strategy.
In his assessment, banning cryptocurrency-related activities was practical in the short term. By banning crypto, it risks leaving people out of significant development opportunities.
He acknowledges that cryptocurrency has brought about new digital technologies. Yiping echoed his stance on virtual currency adoption, saying they remain valuable to the formal financial system.
China’s relationship with crypto is cold though citizens are permitted to hold digital assets. According to Chinese journalist Colin Wu, aside from auditing crypto “whale” investors, the country has imposed a 20% tax on profits from crypto trades and mining for particular investors.
The current crypto taxation framework isn’t entirely defined because of the ban. Therefore, the mixed regulatory stance might present the need for the country to legalize cryptocurrency.
What’s behind China’s cryptocurrency ban?
In late September 2021, China banned cryptocurrency trading and limited its population from using it. The PBoC cited several reasons, including linking virtual currencies to money laundering activities, devaluation of the Yuan, and capital flight.
Although the ban has had implications on the cryptocurrency market, it allowed the United States to be a world leader in crypto mining.
Recent reports claim that there are debates on integrating the Chinese financial system and the crypto economy. State officials have been researching and deliberating on the matter, especially taxation measures.