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The former Chinese finance minister, Lou Jiwei has encouraged China to closely examine the advancements in cryptocurrency, during a speech at the 2024 Tsinghua Wudaokou Chief Economists Forum in Beijing.
The ex-government official highlighted the potential risks crypto poses to financial stability, including volatility and money laundering. He also remarked the United States’ diverting stance toward cryptocurrencies, in light of the US SEC’s approval of spot Bitcoin ETFs.
Impact On Global Markets
Lou also warned about the negative implications cryptocurrencies could have on global markets, especially due to the extent to which price fluctuations can create financial instability. He emphasized that digital currencies have been perceived as threatening financial security, specifically citing areas like anti-terrorism financing and Anti-Money Laundering (AML).
The ex-finance minister said these risks should be carefully considered and examined to safeguard financial systems against potential shocks.
Major Policy Shift in the US
Lou also pointed out the major policy shift in the US. He has urged the Chinese policymakers to pay close attention to these international shifts in the perception of crypto assets.
He accentuated the importance of studying the risks and innovations of the digital economy, specifically in light of the US’ acceptance of cryptocurrencies in its financial markets.
Who Dominates Bitcoin Mining?
Despite the country’s blanket ban on BTC mining and trading, which went into effect in 2021, interestingly, China controls over 55% of the BTC mining network via mining pools.
In a Sept. 23 X post, Ki Young Ju, highlighted that this BTC mining dominance is slowly shifting away to US mining firms. Ju revealed that US pools manage around 40% of all BTC mining operations, primarily catering to institutional miners in America while Chinese pools support relatively smaller miners in Asia.
“China Needs To Step Up”
As per the former government official, the upcoming U.S. presidential election may also introduce additional policy changes following the approval of spot Bitcoin exchange-traded funds.
He even quoted former President Donald Trump, who has been advocating for embracing crypto to prevent China from taking the lead in the sector.
The call for a policy shift echoes comments from Tron founder Justin Sun, who urged China to reconsider its stance on crypto following Trump’s endorsement of Bitcoin.
Sun had tweeted in July, “China also needs to step up… US policies have warmed. China should make further progress.”
While China maintains a cautious stance, it has taken small steps towards becoming more open to crypto.
