Chinese regulators say Bitcoin will play an important role in the future

The latest news that has been all over the internet is that the deputy governor of the People's Bank of China has for the first time acknowledged the value of Bitcoin and other cryptocurrencies. April 18 (Xinhua) -- Li Bo, deputy governor of the People's Bank of China, called these assets an important part of the future at the Boao Forum for Asia sub-forum on the evening of the 18th. Li Bo said that Bitcoin and cryptocurrencies should be regarded as alternative investments, and revealed that China is studying regulatory policies for these assets. In the future, any stablecoin that hopes to become a widely used payment tool must be subject to strict supervision like financial institutions such as banks or quasi-banks.

Li Bo, deputy governor of the People's Bank of China, said: "It is imperative to ensure that speculation in crypto assets does not cause serious financial risks. In other words, we will continue to maintain current measures and practices until we determine future regulatory rules." At the Boao Forum for Asia sub-forum, Li Bo, accompanied by Zhou Xiaochuan, former governor of the People's Bank of China, emphasized that "finance", cryptocurrencies and digital assets should serve the "real economy." Zhou Xiaochuan said that whether it is digital currency or digital assets, they must serve the real economy. While the market is promoting the development of digital assets, it should also pay attention to what are the benefits of digital assets to the real economy?

China's Digital Yuan, Attacking Bitcoin and the Dollar?

China's central bank is developing a digital yuan. Currently, the central bank is testing and developing the central bank digital currency (CBDC) user interface, wallets and other features. Li Bo, deputy governor of the People's Bank of China, said the government's goal is not to "replace the dollar" or any other currency. Li Bo said that the CBDC is intended to "promote trade and investment" and hopes that the market will "choose" the best way to achieve this goal.

In the view of industry insiders, the difference between central bank digital currency and cryptocurrency is that central bank digital currency is initiated by the central bank and assumes the function of legal tender, while crypto assets such as Bitcoin are more of an investable asset and cannot be regarded as a currency with a stored value function issued by the central bank. Considering that crypto assets are still in the early stages of development, whether they can better assume the investment function remains to be discussed, which is also the focus of attention of various countries.

Promoting digital RMB may legalize Bitcoin

Zhou Xiaochuan also emphasized: "The digital payment system is a decentralized system, but you cannot use this system to launder money, evade taxes, or engage in drug and arms transactions. However, the wholesale system has the possibility of operation in many aspects. I think the biggest demand is still in the retail system. For China, it is mainly for future cross-border payments. However, there are still many big problems in cross-border transactions, such as the sovereign currency issues of central banks."

Most notably, the deputy governor of the People's Bank of China and the former governor of the People's Bank of China mentioned Bitcoin while expressing the progress of CBDC development. They also believed that Bitcoin is a special asset and recognized its value and would be included in the regulatory system. In addition, with the promotion of the digital RMB, the underlying blockchain technology has long been defined as a national strategy. Bitcoin, which is also based on the underlying blockchain and is more well-known, cannot be completely separated from CBDC. Perhaps in the future, with the promotion of CBDC, Bitcoin will also be included in the compliance regulatory system, and perhaps Bitcoin will be legalized in China in the future.