China is softening the tone on Bitcoin, calling it an “investment alternative” after years of cracking down on crypto Financial and business news
A small toy figure can be seen on representations of the virtual Bitcoin currency displayed in front of an image of the Chinese flag in this illustration image on April 9, 2019.
REUTERS / Dado Ruvic / Illustration / File Photo
China reversed its stance on Bitcoin on Sunday, calling the digital asset an “investment alternative” after years of cracking down on cryptocurrencies – a remark Beijing insiders described as “progressive”, CNBC reported for the first time.
“We consider bitcoin and stablecoin as crypto assets … these are investment alternatives,” said Li Bo, deputy governor of the People’s Bank of China, during the Boao Asia Forum, a panel hosted by CNBC on Sunday.
“They are not in themselves a currency. The main role that we see for crypto assets in the future is the investment alternative.”
China closed its cryptocurrency exchanges in 2017 and banned the first coin offers. This was a new way for startups to raise money by generating their own virtual currencies.
As investment alternatives, “many countries, including China, are still looking into what kind of regulatory requirements might be minimal, but we need some kind of regulatory requirement to prevent … speculation about such assets from arising.” serious financial stability risks, “said Li.
While the move was a pivotal point for China, Edward Moya, senior equity analyst at OANDA, said it wasn’t that surprising.
“China needed a more relaxed stance on Bitcoin to support the later launch of its digital coin,” he told Insider. “China’s cyber yuan is making headway and it looks like China will win the central bank’s race to introduce a digital coin.”
According to a new Citi report earlier this month called Future of Money, the Asian superpower is already on the scale of extensive pilot tests. China began developing its digital currency electronic currency – a form of the central bank’s digital currency – in 2014 and tested a pilot in 2020. Citi expects China’s “Sprint to a Cashless Society” to take place within five years.
China’s mitigating stance comes from Turkey’s central bank banning the use of cryptocurrencies as a payment method from April 30th. The move raised fears that other nations might follow suit.
Moya added that the biggest risk to Bitcoin in the coming months will be tight restrictions or government shutdowns to, among other things, thwart people who use cryptocurrencies to finance terrorism or to facilitate money laundering.
“New regulatory requirements will come in, it’s just unclear what form they will take,” he said.
Bitcoin hit an all-time high of over $ 64,000 last week due to the excitement over Coinbase’s direct listing. Over the weekend, the world’s largest cryptocurrency by market capitalization fell 17% to its lowest level since February, but rebounded on Monday and regained stability.