At the 2024 Tsinghua PBC Chief Economist Forum, former Chinese Vice Minister of Finance Zhu Guangyao urged China to re-evaluate its approach to the crypto industry.
He cited the evolving international stance on digital currencies, particularly in the United States, where the asset class has gained political support from key figures like U.S. presidential candidate Donald Trump.
Policy Shift
In his speech, Zhu acknowledged the risks and challenges posed by crypto but emphasized the need for China to study global trends and policy adjustments closely.
“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,” he added.
The former minister reflected on the global evolution of digital currencies, noting that over the past decade, the United States has consistently regarded them as a major threat to international efforts to combat money laundering and terrorist financing. Their volatile nature has also been seen as a threat to the stability of global financial markets.
However, Zhu observed that their policy has undergone a shift this year. He pointed to Donald Trump’s 2024 presidential campaign, which has openly embraced the assets, with the American politician publicly cautioning that “we must embrace cryptocurrencies, otherwise China will replace us.”
Additionally, he noted the approval by the U.S. Securities and Exchange Commission (SEC) of 11 Bitcoin exchange-traded funds (ETFs) earlier in the year and the later greenlighting of similar Ethereum (ETH) products despite the agency’s initial reluctance.
Zhu also mentioned that emerging economies, including BRICS nations such as Russia, South Africa, Brazil, and India, are also taking steps to incorporate cryptocurrencies into their financial systems.
China’s Approach to Crypto
China’s relationship with the crypto industry has been complex and restrictive, evolving yearly as the government has taken an increasingly firm stance against digital assets.
It began in December 2013 when the People’s Bank of China (PBoC) and other regulatory bodies issued a notice prohibiting banks from handling Bitcoin transactions.
In 2017, it intensified its efforts by barring Initial Coin Offerings (ICOs) in early September, deeming them illegal forms of public financing. Shortly after, the PBoC ordered all cryptocurrency exchanges in the country to cease operations by the end of September, citing concerns about the potential use in criminal activities like drug trafficking and money laundering.
As a result, major exchanges such as Binance were forced to relocate, while traders increasingly turned to overseas platforms via VPNs. In 2021, the government escalated its crackdown, banning crypto mining and declaring all crypto-related transactions illegal.
However, in recent times, Hong Kong, which is a semi-autonomous region of China, has escalated its acceptance of crypto. Working under the principle of “one country, two systems,” which allows it to maintain its own legal and economic systems, Hong Kong has set up a clear regulatory framework for the industry, and is actively courting global players in the sector to put down roots in the city.