During a speech at the 2024 Tsinghua Wudaokou Chief Economists Forum in Beijing, former Chinese finance minister Lou Jiwei urged China to closely examine advancements in cryptocurrency.
According to Sina Finance’s report of the speech, the ex-minister highlighted the potential risks crypto poses to financial stability, including volatility and their role in money laundering.
He also noted the United States shift in stance, particularly in light of the US Securities and Exchange Commission (SEC) approval of Bitcoin exchange-traded funds (ETFs).
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Global financial stability concerns
Lou warned of the negative implications cryptocurrencies could have on global markets, especially due to the extent to which price fluctuations can create financial instability.
He highlighted that digital currencies have been perceived as a long-established threat to financial security, specifically noting areas such as anti-terrorism financing and Anti-Money Laundering (AML).
The ex-finance minister said these risks should be carefully considered and examined to safeguard financial systems against potential shocks.
Related: The key misunderstanding with China’s purported BTC hashrate dominance
US crypto policy U-turn
Lou pointed out the major policy shift in the US, where the SEC’s stance on Bitcoin (BTC) and its related ETFs changed from rejection to approval.
The former finance minister urged Chinese policymakers to pay close attention to these international shifts in the perception of crypto assets.
He stressed the importance of studying the risks and innovations of the digital economy, particularly in light of the US acceptance of cryptocurrencies in its financial markets.
“…we also need to study the latest international changes and policy adjustments because they are crucial for the development of the digital economy.”
Related: China still controls 55% of Bitcoin hashrate despite crypto ban
China dominates crypto hashrate
Despite the country’s blanket ban on BTC mining and trading, which went into effect in 2021, China controls over 55% of the BTC mining network via mining pools.
In a Sept. 23 X post, Ki Young Ju, founder and CEO of CryptoQuant, highlighted that this BTC mining dominance is slowly shifting away to US mining firms.
Ju revealed that US pools manage around 40% of all BTC mining operations, primarily catering to institutional miners in America, “while Chinese pools support relatively smaller miners in Asia.”
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