After a four-year ban on cryptocurrency issuance and trading, the People's Bank of China appears to be changing its position. This follows comments made by Deputy Governor of the Central Bank of China, Li Bo, who described Bitcoin as an alternative investment.
Cryptocurrency regulation in China would be a huge win for the industry as a whole. Before the 2017 ban, Chinese residents were one of the biggest buyers of Bitcoin.
In 2017, China banned initial coin offerings (ICOs) and, later that year, banned cryptocurrency trading and cracked down on exchanges. Despite this, it remains the largest Bitcoin mining hub. Last week alone, blackouts in southwestern China caused Bitcoin's total hash mining rate to drop by 15%.
Regulation of cryptocurrencies arriving in China
Ahead of the launch of the central bank's digital yuan, regulators appear to shift their focus to the broader cryptocurrency sector. Li Bo, the deputy governor of the Central Bank of China said:
“They are not a currency in themselves. And so, the main role we see in crypto assets in the future is the investment alternative ”.
In an interview, the regulator further talked about the intention to regulate the sector.
“Many countries, including China, are still looking into the matter and thinking about what kind of regulatory requirements to apply. It might be minimal, but we need some sort of regulatory requirement to prevent speculation in these assets from creating serious financial stability risks, ”he added.
The price of bitcoin has yet to respond after a bloody weekend that saw the digital asset lose more than 10%. As of press time, it is down 1,53% and is trading at just under $ 57.000.
As China begins to embrace the industry, in Turkey, the government has banned the use of digital assets to pay for goods or services. The government is under pressure with inflation at an all-time high. This move caused Bitcoin to drop last week.
China is still ahead in the development of CBDC
China wants to release the digital yuan as early as next year during the Beijing Winter Olympics. The event offers the opportunity to test digital currency with residents and foreigners.
Already this has shaken the Biden administration with intelligence services examining the potential threat the digital yuan poses to the United States and its dominant reserve currency in USD. The United States has been considering the possibility of a digital dollar for months, but nothing has been finalized yet.
In another key development, in the past few hours, it has been reported that the Bank of England has set up a task force that will explore the potential of a central bank digital currency (CBDC).
In short, the digital currencies of central banks seem to be increasingly a reality. And you have already started buying Bitcoin with PayPal? Let us know in the comments below.