BOAO, China – China’s central bank now calls bitcoin an “investment alternative,” marking a significant shift in Beijing’s tone after cracking down on issuance and trading of cryptocurrencies nearly four years ago .
Industry experts called the comments “progressive” and are closely monitoring regulatory changes made by the People’s Bank of China (PBOC).
“We consider Bitcoin and stablecoin as cryptographic assets … They are investment alternatives,” Li Bo, deputy governor of the PBOC, said Sunday during a panel hosted by CNBC at the Boao Forum for Asia.
“They are not currency per se. Therefore, the main role we see for cryptographic assets in the future, the main role is the investment alternative.”
Bitcoin rose about 2% at 12:25 p.m., Beijing time, to more than $ 57,134.04, according to Coindesk data.
In this photo illustration, the Bitcoin logo is 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 | SOUP Pictures | LightRocket | Getty Images
China was one of the world’s leading bitcoin buyers.
But in 2017, China banned so-called initial coin offerings (ICOs), a way to raise money for crypto companies by issuing digital tokens. That same year, authorities closed local cryptocurrency exchanges. The moves were motivated by concerns about financial stability.
As investment alternatives, “many countries, including China, are still studying it and thinking about what kind of regulatory requirements. Maybe minimal, but we need to have some kind of regulatory requirement to avoid … speculation d ‘these assets to create serious risks to financial stability,’ Li said.
He added that the central bank will maintain its current regulations on cryptocurrencies.
Li’s latest comments reveal a potential change of tone from the PBOC.
Flex Yang, CEO and founder of Babel Finance, described the comments as “progressive” in an interview with CNBC on Monday. Babel Finance is a cryptocurrency financial services company.
“I think it’s quite significant and it’s certainly different from your previous statements or positions on public cryptocurrencies,” Vijay Ayyar, head of business development for the Luno cryptocurrency exchange, told CNBC by email.
Bitcoin seems to have become a major current in the financial world and has gained interest in institutional investors. Large corporations like Tesla and Square in the US have bought large sums of bitcoins. The price of bitcoin has risen 95% this year and last week the cryptocurrency hit a record above $ 64,000.
This all-time high coincided with the direct listing of cryptocurrency exchange Coinbase, which an investor called a “basin” moment for the industry.
“Governments are realizing that it is a viable and established but growing asset class, and that they need to regulate it. China’s cryptocurrency regulation would be another massive boost for industry in China and beyond. world level, ”Ayyar said, talking about the motivation behind the change of tone.
China is working on its own digital currency called the digital yuan. It is not a cryptocurrency and is different from bitcoin. It will be issued by the PBOC. The goal is to replace cash and coins in circulation.
China has conducted several tests with digital currency in major cities and Li said the central bank could test the digital yuan with foreign visitors at the 2022 Beijing Winter Olympics.