The People’s Bank of China (PBOC) has commented on potentially changing some of the regulation surrounding bitcoin and cryptocurrency, revealing it views them as an “investment alternative”.
Li Bo the deputy governor of the PBOC referred to crypto assets as an investment alternative in a recent panel discussion hosted by CNBC on central bank digital currencies:
“The main role we see for crypto assets is as an investment alternative...we need to have some regulatory requirements.”
The comments by Li are significant, and suggest the bank may be considering changing their current stance on crypto assets.
Since 2017 the PBOC has not been welcomed cryptocurrencies. It previously made no efforts to support the regulation of crypto, following a complete government crackdown on crypto exchanges, limiting investment to professional traders, and most recently the nation trialed their central bank digital currency.
China’s crackdown on crypto in 2017 resulted in a 6% decline in Bitcoin price. If the nation were to regulate it as an asset class, the effects on Bitcoin price could be equally significant, but this time the price would likely rise up in response.
While the bank maintains its current stringent regulations, the comments by the deputy governor suggest that the bank's view may be shifting.
“We regard Bitcoin and stablecoin as crypto assets ... These are investment alternatives...many countries, including China, are still looking into it and thinking about what kind of regulatory requirements. Maybe minimal, but we need to have some kind of regulatory requirement to prevent ... the speculation of such assets to create any serious financial stability risks”.
As governments start to accept that cryptocurrency or crypto assets have a large presence across industries, the tide is slowly starting to turn in favour of them, either as a currency or an asset class. No greater example of this is the recent Coinbase listing on the Nasdaq.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.