China's Ministry of Finance Ex-Senior Official Calls For Review on China's Crypto Ban

During the 2024 Tsinghua PBC Chief Economist Forum, Zhu Guangyao, a former vice minister of China's Ministry of Finance from 2010 to 2018, called on the government to reassess its stringent ban on virtual assets.

He emphasized the significance of cryptocurrencies for China's digital economy amid ongoing discussions about the evolving landscape of crypto regulation at the forum in Beijing.

China's Crypto Ban Needs to be Reviewed

Zhu's comments arise amid a significant shift in US cryptocurrency policy, prompting calls from experts in China for a reevaluation of its own stance.

In his speech, Zhu recognised the inherent risks associated with cryptocurrencies, such as capital market volatility and potential illegal activities.

However, he stressed the importance of examining global trends and policy adjustments, arguing that while cryptocurrencies present challenges, they are also vital for advancing China's digital economy.

He added:

“It does have negative effects, and we must fully recognize its risks and harm to the capital market,” he said. “But we must study the latest international changes and policy adjustments because it is a crucial aspect of the development of the digital economy.”

Since 2017, when the Chinese government banned initial coin offerings (ICOs) and shut down crypto exchanges, regulatory crackdowns have escalated, culminating in the prohibition of Bitcoin (BTC) mining in 2021 and a declaration of crypto-related businesses as illegal.

These measures were primarily driven by concerns over financial stability and the potential misuse of cryptocurrencies for money laundering and terrorism financing.

Zhu suggested that these issues could be addressed through effective regulation rather than outright bans, noting, "Our current gap [with the US] is that we don't participate.”

He highlighted that underground trading channels persist despite existing restrictions.

Zhu also reflected on the global evolution of digital currencies, noting that the US has traditionally viewed them as a significant threat to international efforts against money laundering and terrorist financing.

However, he observed a recent shift in US policy, especially during Donald Trump's 2024 presidential campaign, which advocates embracing cryptocurrencies to avoid losing ground to China.

He pointed to the US Securities and Exchange Commission's (SEC) approval of 11 Bitcoin exchange-traded funds (ETFs) earlier this year and the subsequent approval of similar Ethereum (ETH) products, despite the agency's previous hesitance.

Furthermore, Zhu mentioned that emerging economies, particularly BRICS nations like Russia, South Africa, Brazil, and India, are also taking steps to integrate cryptocurrencies into their financial systems.

Fellow Chinese Men Criticises China's Crypto Ban

Wang Yang, a leading academic, has criticised China's ban on cryptocurrency mining as "very unwise," arguing that it has inadvertently redirected business opportunities to the US.

He cautioned that if former President Trump were to return to office, China could face heightened "financial isolation," potentially risking its removal from the SWIFT financial messaging system.

Supporting this perspective, economist Huang Yiping, a former member of the People's Bank of China's monetary policy committee, has raised concerns about the long-term viability of the cryptocurrency ban, suggesting it could limit China's ability to harness blockchain technology and other innovations.

Ultimately, the question remains whether the Chinese government will adopt a new regulatory framework to lead in digital asset adoption or continue its current approach, especially given the growing significance of this emerging sector in the global economy.