BOAO, China – China’s central bank is now calling bitcoin an “investment alternative” – marking a significant shift in Beijing’s tone following a crackdown on cryptocurrency issuance and trading nearly four years ago.
Industry insiders called the comments “progressive” and are closely monitoring any regulatory changes by the People’s Bank of China (PBOC).
“We consider Bitcoin and stablecoin to be crypto assets … These are investment alternatives,” Li Bo, deputy governor of the PBOC, said Sunday at a panel hosted by CNBC at the Boao Forum for Asia.
“They are not currencies per se. And so the main role we see for crypto assets going forward, the main role is alternative investment.”
According to data from Coindesk, at 12:25 p.m. Beijing time, Bitcoin was up about 2% by more than $ 57,134.04.
In this photo illustration, the Bitcoin logo can be 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 coin offerings (ICOs), a way of raising money for crypto companies by issuing digital tokens. That same year, authorities shut down local cryptocurrency exchanges. The steps were prompted by concerns about financial stability.
As investment alternatives, “many countries, including China, are still investigating and thinking about what kind of regulatory requirements. Maybe minimal, but we need some sort of regulatory requirement to avoid … the speculation of such assets to create serious risks. for financial stability, ”said Li.
He added that the central bank will maintain current regulations on cryptocurrencies.
Li’s latest comments highlight a possible shift in tone from 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 provider.
“I think it is quite significant and certainly different from their previous statements or views on public cryptocurrencies,” Vijay Ayyar, head of business development at cryptocurrency exchange Luno, told CNBC by email.
Bitcoin appears to have become more mainstream in the financial world and has gained interest from institutional investors Large companies such as Tesla and Square in the US have bought large sums of bitcoin. Bitcoin’s price is up 95% this year and last week the cryptocurrency hit an all-time high above $ 64,000.
That all-time high coincided with the direct listing of cryptocurrency exchange Coinbase, which one investor called a “turning point” for the industry.
“Governments realize that it is a viable and well-established but growing asset class and must regulate it. China regulating crypto regulation would provide another huge boost to industry in China and globally,” Ayyar said of the motivation behind the PBOC’s shift in tone.
China is working on its own digital currency, the digital yuan. It is not a cryptocurrency and it is different from bitcoin. It is published by the PBOC. The goal 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 at the 2022 Winter Olympics in Beijing.