Originally published on: September 29, 2024
Former Chinese finance minister Lou Jiwei recently delivered a speech at the 2024 Tsinghua Wudaokou Chief Economists Forum in Beijing, urging China to thoroughly study the advancements in cryptocurrencies.
In his address, Lou Jiwei highlighted the potential risks associated with cryptocurrencies, such as their impact on financial stability due to volatility and their involvement in money laundering activities. He drew attention to the United States’ evolving stance on cryptocurrencies following the approval of spot Bitcoin exchange-traded funds (ETFs) by the US Securities and Exchange Commission.
Lou emphasized the detrimental effects that cryptocurrencies could have on global markets, underlining the financial instability that price fluctuations can create. He specifically noted the existing threats to financial security posed by digital currencies in areas such as anti-terrorism financing and Anti-Money Laundering (AML) measures.
The former finance minister stressed the need for a comprehensive examination of these risks to protect financial systems from potential shocks, encouraging Chinese policymakers to closely monitor international developments in the perception of crypto assets. He emphasized the importance of studying the risks and innovations of the digital economy, especially in light of the US’s growing acceptance of cryptocurrencies in its financial markets.
Despite China’s ban on Bitcoin mining and trading, which was implemented in 2021, the country still maintains over 55% of the Bitcoin mining network through mining pools. However, recent data suggests a gradual shift as US mining firms are gaining a larger share of BTC mining operations, particularly serving institutional miners in America, while Chinese pools support smaller miners in Asia.
With the landscape of cryptocurrencies evolving rapidly, it is crucial for countries like China to stay abreast of international developments and carefully consider the implications of digital assets on their financial systems. Lou Jiwei’s call for a deeper examination of cryptocurrencies underscores the importance of proactive measures to safeguard financial stability in the face of changing global dynamics.
