BOAO, China – China’s central bank now calls bitcoin an “investment alternative”, which is a significant shift in Beijing’s tone after suppressing the issuance and trading of cryptocurrencies almost four years ago.
Industry insiders call the remarks ‘progressive’ and keep a close eye on regulatory changes brought about by the People’s Bank of China (PBOC).
“We view Bitcoin and stable currency as crypto-assets … These are investment alternatives,” LiB Bo, deputy governor of the PBOC, said on Sunday during a panel hosted by CNBC at the Boao Forum for Asia.
“They are not currency per se. And the most important role we see for cryptocurrencies going forward is the alternative investment alternative.”
According to Coindesk data, Bitcoin was above $ 57,134.04 at 12:25 p.m.
In this photo illustration, the Bitcoin logo is seen on a mobile device with the flag of the People’s Republic of China in the background. (Photo illustration by t / SOPA Images / LightRocket via Getty Images)
Budrul Chukrut | SOPA Images | LightRocket | Getty Images
China was once one of the world’s largest buyers of bitcoin.
But in 2017, China banned so-called initial currency offerings (ICOs), a way to raise money for cryptocurrencies by issuing digital tokens. The same year, authorities stopped local exchanges of cryptocurrencies. The moves were prompted by concerns about financial stability.
As an investment alternative, many countries, including China, are still researching it and thinking about what kind of regulatory requirements. ‘Maybe minimal, but we need to have some sort of regulatory requirement to prevent the speculation of such assets from posing any serious financial stability risks,’ ‘Li said.
He added that the central bank will comply with its current regulations on cryptocurrencies.
Li’s latest remarks highlight a potential shift in the tone of the PBOC.
Flex Yang, CEO and founder of Babel Finance, called the comments “progressive” in an interview with CNBC on Monday. Babel Finance is a crypto-financial services business.
“I think this is very important and is definitely different from their previous statements or positions on public cryptocurrencies,” Vijay Ayyar, head of business development at cryptocurrency exchange Luno, told CNBC in an email.
Bitcoin seems to have become more mainstream in the financial world and has attracted interest from institutional investors. Large corporations such as Tesla and Square in the US bought large amounts of bitcoin. The price of bitcoin is 95% higher this year and last week the cryptocurrency reached a record high of more than $ 64,000.
The everyday high coincided with the direct listing of Coinbase, which one investor called a “watershed moment” for the industry.
“Governments realize that this is a viable and established yet growing asset class and it needs to regulate it. China regulating crypto will be a huge boost to the industry in China and worldwide,” Ayyar said, discussing the motivation behind the PBOCs. tone shift.
China is working on its own digital currency, called the digital yuan. It is not a crypto currency and it is different from bitcoin. It will be issued by the PBOC. The purpose is to replace cash and coins in circulation.
China has conducted a number of tests with the digital currency in major cities and Li said the central bank could test the digital yuan with foreign visitors during the 2022 Winter Olympics in Beijing.