Time for China to Reconsider Its Cryptocurrency Ban
China‘s strict ban on cryptocurrency mining and trading might be more detrimental than beneficial, argues Wang Yang, vice president of the Hong Kong University of Science and Technology. He highlighted that the ban has pushed miners to the U.S., leading to a $4 billion tax revenue loss for China. This shift has strengthened the U.S. crypto market, a scenario Wang believes China should reconsider, especially with the potential return of Donald Trump to power, according to Cryptopolitan.
Wang spoke at the HashKey New Vision event, emphasizing that cryptocurrency companies not interacting directly with Hong Kong citizens could still vitalize Hong Kong’s crypto ecosystem. He proposed that state-owned enterprises should mine or take shares in mining operations to manage risks.
China’s initial embrace of cryptocurrency led to its dominance in Bitcoin trading by 2013, fueled by cheap electricity. However, concerns over financial control led to a 2017 ban on initial coin offerings (ICOs), which later escalated to a comprehensive ban on all non-government-approved cryptocurrencies in September 2021.
Despite the ban, cryptocurrency usage persists in China. The government has suppressed crypto-related activities and removed influencers from social media. However, it still recognizes cryptocurrencies as property or commodities, allowing for taxation on transactions.
Wang criticized the ban for missing out on Bitcoin and blockchain opportunities, which he initially dismissed as scams in 2012 and 2014. He suggested that embracing crypto could benefit China, particularly within the “Belt and Road” initiative. Wang also pointed out that Hong Kong’s slow service pace hinders its potential to lead in blockchain technology.
China remains wary of cryptocurrencies due to concerns about capital outflows, money laundering, and financial instability. Nonetheless, the country is developing a central bank digital currency (CBDC), known as the digital yuan, e-CNY, or e-rmb, reflecting its interest in blockchain technology.
