BOAO, China – China’s central bank now calls Bitcoin an “investment alternative” – marking a significant change in Beijing’s tone following a crackdown on cryptocurrency issuance and trading nearly four years ago.
People in the industry have called the comments “progressive” and are following closely any regulatory changes made by the People’s Bank of China (PBOC).
“We consider Bitcoin and stablecoin as cryptographic assets … These are investment alternatives,” PBOC Vice Governor Li Bo said on Sunday in a panel hosted by CNBC at the Boao Forum for Asia.
“They are not currencies in themselves. Therefore, the main role we see for cryptographic assets in the future, the main role is the investment alternative.”
Bitcoin rose around 2% at 12:25 Beijing time to over $ 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 | Images SOUP | LightRocket | Getty Images
China was once one of the largest bitcoin buyers in the world.
But in 2017, China banned so-called initial coin offerings (ICOs), a way to raise money for crypto companies by issuing digital tokens. In the same year, the authorities closed the local cryptocurrency exchanges. The movements were driven by concerns about financial stability.
As investment alternatives, “many countries, including China, are still looking at it and thinking about what kind of regulatory requirements. Maybe minimal, but we need to have some kind of regulatory requirement to prevent … such speculation of assets to create any serious risks to financial stability, “Li said.
He added that the central bank will keep its current regulations on cryptocurrencies.
Li’s latest comments highlight a possible change of tone from 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 company.
“I think it’s quite significant and it’s certainly different from their previous statements or positions on public cryptocurrencies,” Vijay Ayyar, head of business development at the Luno cryptocurrency exchange, told CNBC via email.
Bitcoin seems to have become more popular in the financial world and has gained interest from institutional investors. Large corporations such as Tesla and Square in the US have purchased large amounts of bitcoin. The price of bitcoin rose 95% this year, and last week, the cryptocurrency hit a record high of $ 64,000.
That all-time high coincided with the direct listing of the Coinbase cryptocurrency exchange, which an investor called the time for “industry.”
“Governments realize that it is a viable and established asset class, however growing, and they need to regulate it. China’s cryptographic regulation would be another massive boost for China’s industry and globally,” Ayyar said. about the motivation behind PBOC tone change.
China is working on its own digital currency called the digital yuan. It is not a cryptocurrency and it is different from bitcoin. It will be issued by PBOC. The purpose is to replace cash and coins in circulation.
China has conducted a series of digital currency tests in major cities, and Li said the central bank could test the digital yuan with foreign visitors to the 2022 Beijing Winter Olympics.