Ex-Chinese Deputy Finance Minister urges country to pivot anti-Bitcoin stance

China's former deputy Finance Minister Zhu Guangyao called on the government to re-evaluate its approach to Bitcoin to stay competitive with the US.

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Zhu Guangyao, former deputy Finance Minister of China, called on the government to re-evaluate its approach to Bitcoin and crypto, stressing the need for deeper research into the technology, according to local media reports.

Speaking at the 2024 Tsinghua Wudaokou Chief Economist Forum on Sept. 28, Zhu warned of the risks posed by digital assets but emphasized their growing significance in the global digital economy.

Call to pivot

Zhu acknowledged the negative impacts of cryptocurrencies, particularly the risks they pose to capital markets and their potential to disrupt anti-money laundering and counter-terrorism financing efforts.

He stated:

“We must fully recognize the risks and the dangers they pose to capital markets. However, it is crucial to study international trends and policy adjustments as they are a vital component of digital economic growth.”

Reviewing the evolution of crypto, Zhu pointed to the US’ long-standing concern over the destabilizing effects of digital assets on global financial markets. He noted that for more than a decade, US policymakers viewed crypto as a significant threat to international anti-money laundering and anti-terrorism financing efforts due to its volatility and disruptive impact.

However, he pointed out that US policy has shifted in 2024, with former President Donald Trump incorporating cryptocurrency into his campaign platform and the US Securities and Exchange Commission approving 11 Bitcoin ETFs for listing on stock and futures markets.

Trump recently headlined the Bitcoin 2024 conference and pledged to support the industry’s growth. He argued that if the US did not take a leadership role in the industry, other nations like China would “overtake” it.

Zhu also highlighted the importance of developments in emerging markets and BRICS nations, including Russia, South Africa, Brazil, and India, which have taken steps toward integrating crypto into their financial systems.

Russia recently implemented legislation allowing the central bank to supervise the crypto sector and allowed companies to settle foreign transactions with crypto payments.

The forum highlighted the need for China to remain vigilant and informed about international shifts in crypto policy to ensure the country remains competitive in the rapidly evolving digital economy.

China’s ban on Bitcoin

China first imposed restrictions on Bitcoin in 2013, prohibiting financial institutions from engaging in crypto transactions. However, this failed to stop the burgeoning industry from growing in the country.

Over the ensuing years, the government escalated its measures, banning initial coin offerings (ICOs) in 2017 and shutting down domestic crypto exchanges.

A few years later in 2021, China implemented a complete ban on Bitcoin mining and trading, citing concerns over financial stability, fraud, and environmental impacts. This ban effectively prohibited all forms of crypto transactions, causing many crypto-related businesses to relocate abroad.

Despite the crackdown, some underground trading persisted through decentralized platforms, with volumes continuing to reach billions of dollars. Meanwhile, Chinese mining pools continue to dominate the Bitcoin hashrate despite the blanket ban within the country.

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