Former Chinese Finance Minister Lou Jiwei gave a speech at the 2024 Tsinghua PBC Chief Economist Forum, urging China to pay close attention to the development of cryptocurrencies.

According to Sina Finance’s report on the speech, the former minister highlighted the potential risks that cryptocurrencies pose to financial stability, including volatility and their role in money laundering. He also noted the shift in the U.S. stance, especially in light of the U.S. Securities and Exchange Commission’s (SEC) approval of a Bitcoin exchange-traded fund (ETF).

Concerns about global financial stability

Lou Jiwei warned that cryptocurrencies could have a negative impact on global markets, especially that price fluctuations could cause financial instability to a large extent. He stressed that digital currencies have been seen as a long-term threat to financial security, especially in the areas of counter-terrorism financing and anti-money laundering (AML). The former finance minister said that these risks should be carefully considered and reviewed to protect the financial system from potential shocks.

Big shift in US encryption policy

Lou Jiwei pointed out that there has been a significant shift in US policy, with the SEC’s stance on Bitcoin (BTC) and its related ETFs changing from rejection to approval. The former finance minister urged Chinese policymakers to pay close attention to the shifting international views on crypto assets. He stressed the importance of studying the risks and innovations of the digital economy, especially in light of the US financial market’s acceptance of cryptocurrencies. “…We also need to study the latest international changes and policy adjustments, as they are crucial to the development of the digital economy.”

China Dominates Crypto Hash Rate

Despite China’s total ban on BTC mining and trading in 2021, the country still controls more than 55% of the BTC mining network through mining pools. In a September 23 post on X, CryptoQuant founder and CEO Ki Young Ju emphasized that the dominance of BTC mining is slowly shifting to American mining companies. Ju revealed that American mining pools manage about 40% of BTC mining operations, mainly for institutional miners in the United States, "while Chinese mining pools support relatively small miners in Asia."

The article is for reference only and does not constitute investment advice.