The former adviser of the Central Bank of China explained the reason for the ban on cryptocurrencies

A professor of finance and economics at the National School of Development at Peking University, a former member of the monetary policy committee of the People’s Bank of China, published an article in which he explained why the authorities banned the circulation of cryptocurrencies in China.

Huang Yiping writes that money laundering problems were the main reason. The PRC authorities use several means to control the movement of capital. Trading digital assets like cryptocurrencies without control and restrictions will have rather negative consequences than positive ones, the researcher is sure.

Due to the lack of fundamental value, electronic cash like bitcoin is considered a digital asset, not a real currency. Studies show that about 25% of all bitcoin accounts and 50% of all trading activity are associated with crime, the professor convinces.

Huang Yiping insists that a ban on cryptocurrencies can bring benefits in the short term, but in the long term, such an initiative requires more serious consideration. Some of the digital technologies introduced by the crypto industry, such as tokenization, distributed data registry, have their own advantages. However, long-term restrictions on bitcoin trading carry the risk of leaving people without important technological advantages.

The scientist believes that there is no specific ideal prescription for a developing country: what position the government should take regarding cryptocurrencies. But sometime, better soon, an effective strategy will have to be developed.

Earlier, a Chinese company announced the development of a cross-border payment system for settlements in stablecoins and digital currency of central banks.