The People’s Bank of China (PBOC) now considers Bitcoin (BTC) as an ‘investment alternative’ according to PBOC’s deputy governor Li Bo. He acknowledged Bitcoin and stable coin as crypto assets that are possible investment alternatives, and ‘not a currency per se’ during a panel interview hosted by Consumer News and Business Channel (CNBC) at the Boao Forum for Asia.
Li Bo added that China is looking into the different regulatory requirements they need to implement to safeguard investors from the speculative nature of cryptocurrencies. This is a crucial shift in the perspective of Beijing which restricted the issuance and trading of BTC in 2017. Data from cryptocurrency news site Coindesk shows that there was a 2% increase in BTC trading activity at 12:25 PM last April 19, 2021 in Beijing time when BTC’s price was around $57,134.04.
China was previously one of the largest buyers of Bitcoin until crypto trading activities were halted in the country after authorities implemented strict policies on cryptocurrencies in 2017. They banned initial coin offerings (ICOs) which crypto companies use to gain capital for their projects by selling coins at a low price. Additionally, over 100 local cryptocurrency exchanges have been shut down due to lack of proper licenses. They were pushed to do these measures because of risks in financial scams and concerns about capital outflows.
The PBOC is coming up with different ways to lessen any potential risks of using Bitcoin even if it is regarded as an investment alternative. In addition, Li Bo announces that the central bank will be using its current regulations on cryptocurrencies for this plan.
Founder of China-based crypto-financial services company Babel Finance and CEO Flex Yang stated in an interview with CNBC that choosing to use Bitcoin for possible investments in the future is a ‘progressive’ move by the PBOC.
Head of business development at cryptocurrency exchange Luna Vijay Ayyar said ‘it is a significant shift’ and is ‘different from their previous statements on public cryptocurrencies’. He further comments about how ‘governments are realizing that cryptocurrencies are viable and established’ and therefore need to be regulated and not banned.
China is currently working on their own digital yuan which will be issued by the PBOC with the objective of replacing cash and coins, besides preparing to use BTC for future investments. It is a project that has been researched since 2014 and is different from BTC despite being a digital form of money used through mobile phones.
Li Bo said that they aim to make this digital currency available for foreign visitors and athletes of the 2022 Beijing Winter Olympics to use. A series of successful tests regarding distribution has been conducted around the cities of Shenzhen and Beijing in the early months of 2021.
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