Originally published on: September 29, 2024
Former Chinese finance minister Lou Jiwei has stressed the importance of China closely examining developments in the cryptocurrency sphere, especially in light of the recent approval of spot Bitcoin exchange-traded funds (ETFs) by the US Securities and Exchange Commission.
Speaking at the 2024 Tsinghua Wudaokou Chief Economists Forum in Beijing, Lou warned of the potential risks associated with cryptocurrencies, such as price volatility and their potential for facilitating money laundering activities. He emphasized the need for policymakers to carefully consider these risks to safeguard financial systems against instability.
Lou also pointed out the significant policy shift in the US towards cryptocurrencies and urged Chinese authorities to pay close attention to these international developments. He highlighted the importance of studying the risks and innovations brought about by the digital economy, particularly in light of the US’s growing acceptance of cryptocurrencies in its financial markets.
Despite China’s ban on Bitcoin mining and trading, the country still controls over 55% of the BTC mining network. However, there is a gradual shift of mining dominance from Chinese to US firms, with US mining pools now managing around 40% of all BTC mining operations.
Lou’s call for a crypto study comes as countries around the world navigate the evolving landscape of digital assets and work towards understanding and regulating this rapidly growing sector. By staying informed and proactive, China can position itself to deal with the challenges and opportunities presented by cryptocurrencies in the global financial markets.