BOAO, China – China’s central bank is now calling Bitcoin an “investment alternative” – a marked change in Beijing’s tone after cracking down on the issuance and trading of cryptocurrencies nearly four years ago.
Industry insiders called the comments “progressive” and are closely watching the regulatory changes made by the People’s Bank of China (PBOC).
“We consider bitcoin and stablecoin as crypto assets … these are investment alternatives,” said Li Bo, deputy governor of the PBOC, on Sunday during a panel hosted by CNBC at the Boao Forum for Asia.
“They are not a currency in themselves. The main role we see for crypto assets in the future is the investment alternative.”
At 12:25 p.m. Beijing time, Bitcoin rose around 2% to over $ 57,134.04, according to Coindesk data.
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 pictures | LightRocket | Getty Images
China was once one of the world’s largest buyers of Bitcoin.
In 2017, however, China banned so-called Initial Coin Offerings (ICOs) to raise money for crypto companies by issuing digital tokens. In the same year, the authorities closed the local cryptocurrency exchange. The moves were triggered by concerns about financial stability.
As investment alternatives, “many countries, including China, are still looking into what kind of regulatory requirements there are. Perhaps minimally, but we need some kind of regulatory requirement to prevent … speculation about such assets from arising.” serious financial stability risks, “said Li.
He added that the central bank will maintain its current regulations on cryptocurrencies.
Li’s recent comments highlight a possible tone shift 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 finance service provider.
“I think it’s quite significant and is definitely different from what you’ve made earlier statements or positions on public cryptocurrencies,” Vijay Ayyar, director of business development at Cryptocurrency Exchange Luno, told CNBC via email.
Bitcoin appears to have become more prevalent in the financial world and has piqued the interest of institutional investors. Big companies like Tesla and Square in the US have bought large sums of Bitcoin. Bitcoin price has soared 95% this year, and last week the cryptocurrency hit a record high of over $ 64,000.
This all-time high coincided with the direct listing of the Coinbase cryptocurrency exchange, which one investor described as a “turning point” for the industry.
“Governments are realizing that this is a viable and well-established but growing asset class that needs to be regulated. China’s regulation of crypto would be another massive boost to the industry in China and around the world,” Ayyar said, speaking on the Motivation behind the PBOCs tone shift.
China is working on its own digital currency, the digital yuan. It is not a cryptocurrency and is different from Bitcoin. It is issued by the PBOC. The aim is to replace cash and coins in circulation.
China has conducted a series of tests on the digital currency in major cities, and Li said the central bank could test the digital yuan with overseas visitors at the 2022 Beijing Winter Olympics.