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China’s Ex-Finance Minister Calls for In-Depth Research into Cryptocurrencies

by Abimbola Adu
Sep 30, 2024 - 8:30 pm
in Blockchain
Former Chinese Finance Minister Zhu Guangyao delivering a speech on the importance of cryptocurrency research at a forum in Beijing.

Zhu Guangyao Urges China to Ramp Up Cryptocurrency Research

Zhu Guangyao, the former Finance Minister of China, urged the country’s government to do more profound research on the fast-changing world of cryptocurrency. In a speech to the Tsinghua PBC Chief Economist Forum in Beijing, Zhu, while citing that cryptocurrencies do present risks, are essential to the future of the global digital economy.

His comments signal the growing importance of cryptocurrencies on the world stage and an evident need for China to consider the newest international developments and policy shifts with due care in this area.

The Role of Cryptocurrencies within the Digital Economy

Zhu Guangyao, very influential in helping to shape China’s financial policies, sounded a note of caution and optimism when discussing the future of cryptocurrencies. First reported by Sina, Zhu highlighted that while cryptos pose certain negative risks-such as their volatility and the potential to disrupt traditional financial systems-they equally represent a very important part in the development of the digital economy.

According to Zhu, China must stay alert in identifying the dangers of this budding asset class. He noted that while cryptos have their downsides, the country couldn’t afford to look away from how they’ll shape future financial systems. “We must study the latest international changes and policy adjustments,” Zhu said, “because this is a crucial aspect of the development of the digital economy”.

International Influence: Trump’s Pro-Crypto Stance

Zhu’s comments come amidst a wider global debate on the future of cryptocurrencies, in particular in the United States. Zhu alluded to recent comments by former US President Donald Trump in order to welcome digital assets. Currently the frontrunner in the race for the Republican nomination for the upcoming 2024 US Presidential elections, Trump had supported the adoption of cryptocurrencies back in July at the Bitcoin Conference in Nashville.

During the event, Trump warned of the U.S. falling behind China unless embracing a crypto future. He said: “The US must accept cryptocurrencies, or China will replace us”. Trump for the first time voiced public support for the crypto industry to play a major role in future economic policy, in a sign of growing international competition over digital currencies.

Dutchman hijacked cryptocurrency-related unreleased films and TV series of major Hollywood studios using stolen login credentials to upload to pirate sites.

Surge in OTC Crypto Activity in China

Zhu is also timely in his call for increased research in cryptocurrencies amid a recent surge in crypto activities in China, especially over the OTC brokers. A recent report by blockchain analytics firm Chainalysis indicated that even though crypto trading and mining are banned in China, OTC crypto brokers in the country are witnessing a significant surge in transactions.

According to Bloomberg, in the first half of 2023 alone, the Chinese OTC traders added $20 billion each quarter. This set of brokers has cumulatively handled $75 billion in the last nine months. Therefore, activity is higher and could hint at increasing interest in crypto among the Chinese people, perhaps as a response to economic uncertainty within the country.

Chainalysis connected the proliferation to anxiety related to China’s general economic conditions, in which people were finding options beyond normality. Continuous crypto trading via OTCs means that there is a growing interest in digital currencies despite Beijing’s no-nonsense policy against it.

China’s Regulatory Landscape: A Gray Zone for Cryptocurrencies

Although China somewhat became the first country to instate a sweeping ban on most cryptocurrency-related activities back in 2021-putatively to root out crypto mining and prohibit all transactions-the actual enforcement of the country’s ban seems looser than initially thought. The ban on cryptocurrency transactions and mining in China is “loosely enforced”, said Eric Jardine, Chainalysis’ lead on cybercrimes research, thus enabling the continuity of operation for specific sectors of the crypto market, like OTC brokers.

These services, he said, exist in a gray area of China’s regulatory landscape. Chinese authorities have adopted an approach that is very complex and somewhat contradictory, which means crypto activity is technically banned but has continued to thrive under the radar. Enforcement ambiguity has meant continued interest from Chinese citizens looking to participate in the global crypto market, while the Chinese government remains largely cautious.

The Future of Cryptocurrency Research in China

Zhu Guangyao’s comments hint at a softening in China’s stance towards the digital currency. Urging further research into the asset class, he suggestively hinted that China might revisit its stand in the light of international trends and increase in the use of digital currencies globally. Although China still opposes the trading and mining of cryptocurrency officially, probably because of growing interest both inside and outside the country, further studies with potential policy adjustments could be done.

While Zhu’s comments do seem to reflect a broader sentiment-as China continues to navigate the complexities of integrating cryptocurrencies into its digital economy-it would appear it fundamentally cannot afford to fall behind in the global crypto conversation.

Tags: ChinaRegulationWeb3
Abimbola Adu

Abimbola Adu

Abimbola Adu is a crypto content writer with a background in English studies. She is keen on enlightening others about cryptocurrency and blockchains. She enjoys writing poems and spending time with family.

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