During a speech at the 2024 Tsinghua Wudaokou Chief Economists Forum in Beijing, former Chinese Finance Minister Lou Jiwei encouraged China to closely examine the advancements in cryptocurrency. Lou highlighted the potential risks that cryptocurrencies pose to financial stability, including volatility and money laundering. He also commented on the United States’ evolving stance on cryptocurrencies, particularly in light of the US SEC’s approval of spot Bitcoin ETFs.
Impact On Global Markets
Lou Jiwei also warned about the negative implications cryptocurrencies could have on global markets. The extent to which price fluctuations can create financial instability is particularly concerning. He emphasized that digital currencies have been perceived as a threat to financial security, specifically pointing out areas like anti-terrorism financing and Anti-Money Laundering (AML). According to Lou, these risks should be carefully considered and examined to safeguard financial systems against potential shocks.
Major Policy Shift in the US
The ex-finance minister also pointed out the major policy shift occurring in the United States. He urged Chinese policymakers to pay close attention to these international shifts in the perception of crypto assets. Lou accentuated the importance of studying the risks and innovations of the digital economy, especially given the US’ acceptance of cryptocurrencies in its financial markets.
Who Dominates Bitcoin Mining?
Despite China’s blanket ban on Bitcoin mining and trading, which went into effect in 2021, the country interestingly controls over 55% of the Bitcoin mining network via mining pools. In a social media post on September 23, Ki Young Ju highlighted that this Bitcoin mining dominance is slowly shifting away to US mining firms. Ju revealed that US pools now manage around 40% of all Bitcoin mining operations, primarily catering to institutional miners in America, while Chinese pools support relatively smaller miners in Asia.
China Needs To Step Up
According to the former government official, the upcoming U.S. presidential election may also introduce additional policy changes following the approval of spot Bitcoin exchange-traded funds. He even quoted former President Donald Trump, who has been advocating for embracing crypto to prevent China from taking the lead in the sector.
The call for a policy shift echoes comments from Tron founder Justin Sun, who urged China to reconsider its stance on crypto following Trump’s endorsement of Bitcoin. Sun had tweeted in July, “China also needs to step up… US policies have warmed. China should make further progress.” While China maintains a cautious stance, it has taken small steps towards becoming more open to cryptocurrency.
