In February last year, Chinese authorities indicated that transactions made with “virtual currencies” started to become illegal in that country. Therefore, they would carry serious penalties for anyone who failed to comply with the rule.
Now, Yiping, who is currently a professor of economics at Peking University, believes the decision to ban bitcoin and other cryptocurrencies is counterproductive for the country.
“A permanent no to cryptocurrencies could result in missed opportunities in the blockchain ecosystem that are very valuable in the financial system,” Yiping said, according to the South China Morning Post media outlet.
The former advisor’s comments come as China’s central bank has made a fresh push for the digital yuan to gain popularity. In this regard, Yiping noted that the possibility of institutions issuing a new currency is a “very sensitive” issue, so it is worth considering the pros and cons.
The digital yuan, or central bank digital currency (CBDC), which the Asian nation launched in 2020 is now being used in 17 new provinces, without achieving the total amount transferred exceeding the figures reached last year.
During this year’s Lunar New Year vacations, the volume of digital yuan transactions, in the designated pilot cities, amounted to 180 million yuan (USD 26 million).
Digital Yuan usage.
China’s government continues to give away coupons to boost the use of digital yuan among the population. Source: YouTube/ Switch TV News.
Meanwhile, last year, official data showed that total transactions from December 2019 to August 2022 amounted to 100 billion yuan, an average of more than 700 million yuan per week, as reported by the referred media outlet.
Despite China’s ban, interest in Bitcoin continues unabated
Last year, Chainalysis’ ranking of bitcoin and other cryptocurrency adoption reflected that, despite the ban, China’s population continues to maintain interest in digital assets, as it ranked in the top 10 of the list, climbing 3 places from the place it occupied in 2021.
In fact, despite the ban, last year, a Chinese High Court recognized bitcoin as property protected by law, giving a new twist to the legal aspects related to cryptocurrencies in the country.
Now, if there is a change of position by the government, it would not be the only time this happens, since at least 7 times the country has vetoed the use of cryptocurrencies in its territory.
However, until recently, China was a powerhouse in the cryptocurrency world, not only because it was home to the three largest exchanges in the world, such as Huobi, Binance and OKEx, but also because the country had three-quarters of the world’s Bitcoin mining power.
However, in 2021, shortly after banning digital mining, China ceded ground and was displaced by the United States as the territory that centralized this activity. Government measures caused a large migration of miners and companies.
Many have become nomads and now move to where they believe better energy and regulatory conditions await them to do their work.
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