China’s strict stance on cryptocurrency is causing more harm than good. Wang Yang, vice president of the Hong Kong University of Science and Technology, believes the total ban on crypto mining was a big mistake.
This decision pushed miners to the United States, bringing it over $4 billion in tax revenue. With Donald Trump’s potential return to power, Wang suggests that China needs to reconsider its approach to cryptocurrency.
During his speech at the HashKey New Vision event, Wang emphasized the importance of not driving away cryptocurrency companies that don’t directly interact with Hong Kong citizens. These companies can still inject vitality into Hong Kong’s crypto ecosystem.
Wang also criticized the complete ban on mining, saying it resulted in a massive tax windfall for the United States. He proposed that allowing state-owned enterprises to mine or take shares in mining operations could help manage risks.
China needs to rethink crypto
Wang Yang stated that China should rethink its stance on cryptocurrencies. In the context of the “Belt and Road” initiative, embracing crypto could be beneficial. He highlighted that the current problem is the uncontrollable nature of the assets.
Wang admitted that he missed opportunities with Bitcoin and blockchain in 2012 and 2014, thinking they were scams. He also pointed out that Hong Kong’s service pace is too slow and complacent. Hong Kong should aim higher and lead the region in blockchain technology development.
Related: China’s economy is showing some strong signs of comeback
China initially welcomed cryptocurrencies, becoming a major player in the global market. By 2013, China dominated Bitcoin trading, and large-scale mining operations flourished due to cheap electricity.
However, concerns over economic and financial control led the government to ban initial coin offerings (ICOs) in 2017, labeling them an illegal method of raising funds.
This crackdown escalated, and by September 2021, all non-government-approved cryptocurrencies were banned, ending crypto mining and trading within China.
Despite the ban, cryptocurrency usage persists in China. The government continues to suppress crypto-related activities, even removing influencers from social media platforms.
Although cryptocurrencies are illegal, the government still recognizes them as property or commodities. This allows for taxation on relevant transactions under current law.
China’s concerns about cryptocurrencies are multifaceted:
- Potential for concealing capital outflows
- Involvement in money laundering
- Perceived financial system instability
Despite these concerns, China is keen on blockchain technology. The country is developing a central bank digital currency (CBDC), called the digital yuan, e-CNY, or e-rmb.
Jai Hamid
