China risks losing out on numerous opportunities if the cryptocurrency sector continues to be banned.
That assessment, made two years ago by The Trends Journal when China shut down bitcoin mining and banned cryptocurrency participation of citizens, is now being echoed by a prominent former Chinese Central Bank official.
“Banning cryptocurrencies may be practical in the short term, but whether it is sustainable in the long run deserves an in-depth analysis,” Huang Yiping, a former member of the Monetary Policy Committee at the People’s Bank of China (PBoC), recently weighed in, according to Cointelegraph.
While Yiping carefully worded his critique of China’s current crypto policies, he managed to communicate several danger signals regarding China’s digital strategy.
Among them was another longtime “Trends In Crypto” forecast regarding China’s Digital Yuan: it’s having trouble regarding adoption.
Huang, now a professor of economics at Peking University, acknowledged China’s CBDC has not been widely used, despite being available for several years and pressured for the government to try to force adoption.
Huang suggested weighing possible advantages of allowing private entities to generate stablecoins, though Cointelegraph noted that the former Chinese official said discussing such an idea was “extremely delicate.”
China: Trouble Innovating
Huang’s comments come as the crypto sector is showing signs of revival.
If anything, the ongoing crypto winter in a way is proving that crypto technology isn’t going away, though it is subject to the same economic and geopolitical factors as another sector.
There has been continued investment in a wide array of innovations, in DAOs, web3 development, fintech, greater liquidity for assets, tokenization and more.
And China is not only currently missing out, they are setting themselves up to be left behind by regions where crypto technologies are allowed to disrupt and create new efficiencies and value.
Though Huang’s assessment almost certainly doesn’t represent current orthodox opinion in China, his analysis amounts to a critique of how China’s political system has increasingly been unable to respond to challenges of evolving decentralized technologies that emphasize personal agency, autonomy, free participation (via constructs like DAOs) and more.
In 2021, we detailed and predicted in several articles that countries that chose to allow innovation in the crypto sector could realize an advantage over China.
We also predicted that China’s digital Yuan CBDC would have trouble seeing international adoption, due to concerns over surveillance and attributes that were very likely built into the technology.
How rigorous is China’s crypto ban? Though it has been in place since 2021, enforcement hasn’t completely stopped either bitcoin mining or crypto trading.
Official data from the downfall of FTX revealed, for instance, that 8 percent of affected users hailed from mainland China, according to Cointelegraph.