Huang Yiping, a former staff member for monetary policy at the People’s Bank of China (PBoC), has raised concerns about China missing out on financial development opportunities following the nation’s cryptocurrency ban.
Crypto Adoption Linked to Development Opportunities, Says Former PBoC Member
While the PBoC had reasons to ban virtual currency activities, Yiping notes that the central bank should have considered long-term benefitsdigging deeper to realize a sustainable and viable strategy.
In his assessment, banning cryptocurrency-related activities was practical in the short term. By banning cryptocurrencies, you risk leaving people out of important development opportunities.
It acknowledges that cryptocurrency has given rise to new digital technologies. Yiping echoed his stance on the adoption of virtual currencies, saying they remain valuable to the formal financial system.
China’s relationship with cryptocurrencies is cold, although citizens may hold digital assets. According to Chinese journalist Colin Wu, in addition to auditing crypto “whale” investors, the country has imposed a 20% tax on profits of crypto exchanges and mining for individual investors.
The current crypto tax framework is not fully defined due to the ban. Therefore, the mixed regulatory stance could present a need for the country to legalize cryptocurrency.
What is behind the ban on cryptocurrencies in China?
At the end of September 2021, China banned cryptocurrency trading and limited its population’s use. The PBoC cited several reasons, including linking virtual currencies to money laundering activities, the devaluation of the yuan, and capital flight.
Although the ban has had implications for the cryptocurrency market, it allowed the United States to be the world leader in cryptomining.
Recent reports claim that there are discussions about the integration of the Chinese financial system and the crypto economy. State officials have been investigating and deliberating on the issue, especially the tax measures.
