Former Bank of China Adviser Calls to Lift Bitcoin Ban

Huang Yiping, a former adviser to China’s central bank, believes the country should remove its ban on bitcoin and other cryptocurrencies that he believes are valuable to the financial system.

In brief

• People continue to focus their attention on bitcoin and other cryptocurrencies.
• The digital yuan has yet to win over China’s population entirely.

Huang Yiping, formerly a member of the People’s Bank of China’s monetary policy committee, raised the idea that the country should review its ban on trading bitcoin (BTC) and other cryptocurrencies. In February last year, Chinese authorities indicated that transactions made with “virtual currencies” had become illegal in China. As such, they would carry severe penalties for anyone who failed to comply with the rule.

Yiping, a professor of economics at Peking University, believes the decision to ban bitcoin and other cryptocurrencies is counterproductive for the country. “A permanent no to cryptocurrencies could result in missed opportunities in the blockchain ecosystem that are very valuable in the financial system,” Yiping said, according to the South China Morning Post.

The former adviser’s comments come as China’s central bank has made a fresh push for the digital yuan to gain popularity. In this regard, Yiping noted that the possibility of institutions issuing a new currency is a “very sensitive” issue, so it is worth considering the pros and cons.

The digital yuan or central bank digital currency (CBDC), which the Asian nation launched in 2020, is now being used in 17 new provinces, with the total amount transferred failing to exceed the figures reached last year. During this year’s Lunar New Year holidays, digital yuan transactions in the designated pilot cities amounted to 180 million yuan ($26 million).

China’s government continues to give away coupons to boost the use of the digital yuan among the population. Meanwhile, last year, official data showed that total transactions from December 2019 to August 2022 amounted to 100 billion yuan, an average of more than 700 million yuan per week, as the media reported.

Despite China’s ban, Bitcoin interest remains

Last year, Chainalysis’ ranking of bitcoin and other cryptocurrency adoption reflected that, despite the ban, China’s population continues to maintain interest in digital assets. It ranked in the top 10 of the list, climbing three places from the place it occupied in 2021.

In fact, despite the ban, a Chinese High Court recognized bitcoin as a legally protected property last year, giving a new twist to the legal aspects of cryptocurrencies in the country. Now, if there is a change in the government’s stance, it would not be the only time this has happened, as the country has vetoed cryptocurrencies in its territory on at least seven occasions.

However, until recently, China was a powerhouse in the world of cryptocurrencies, not only because it was home to the three largest exchanges in the world, such as Huobi, Binance, and OKEx, but also because the country had three-quarters of the world’s Bitcoin mining power.

However, in 2021, shortly after banning digital mining, China ceded ground and was displaced by the United States as the territory that centralized this activity. Government measures caused a large migration of miners and companies. Many have become nomads and now move to where they believe better energy and regulatory conditions await them to do their work.