Complete Ban on Cryptocurrency is Difficult – Says Chinese Official

Complete Ban on Cryptocurrency is Difficult – Says Chinese Official

If the latest reports from People’s Republic of China are to be believed, the country is finding it hard to completely ban cryptocurrency. The People’s Daily, a government newspaper has posted an article with provides a little glimpse into the regulatory and business challenges the country is facing, as certain steps have had profound impact.

The article, titled as ‘The Ideal and Reality of Digital Currency,’ is written by a representative from the Chinese Academy of Social Sciences (CASS) – and while it serves the primary educational purposes, explores potential opportunities for the usage of cryptocurrencies.

Mr. Yang, the writer, suggests that cryptocurrencies can have profound impact and implications for the existing monetary and financial systems.

According to his views (translated from Chinese): “Both the traditional “private currency” and the new “private currency” similar to Bitcoin have affected the “monetary power” of the monetary authorities of various countries. However, from a technical point of view, it is difficult to achieve a complete ban on digital currency.”

Impact of Volatility on Bitcoin Application

The writer has also talked about the impact of cryptocurrencies on the money transfer and transaction methodologies, and questioned their definition as either commodities or currencies – shall we consider them as currency or commodity?
“From a narrow perspective, digital currency represented by bitcoin has its own ‘monetary attributes’ that are more often regarded as special assets or commodities. Therefore, its actual impact is often not on the monetary level, but on financial markets.”

Moreover, he also touched the limitations imposed on bitcoin due to volatility and unrealistic market speculations. The idea of cryptocurrency functioning as an international reserve currency was also lost its charm due to the very factors.
“Of course, if there are too many price fluctuations, speculation, and deflation restrictions, digital currencies cannot be used for payments, as you will only get farther away from the ‘money experiment,” he says.

China and Global Economy

The story has surfaced following a recent announcement by china (before G20 summit) that it demands “overhaul of the global financial system”. The government officials in China believe that it’s the time to get their currency recognized in the center stage in the world.

It is pertinent to mention that the Chinese Yuan is currently the third reserve currency, after the US dollar and euro. However, due to the non-interference policy of the country over the years, it couldn’t be as popular as Euro or USD.

Internationalizing its currency can be a crucial step in bringing the country to its dream goal – be close to the center stage.

If China aims to go ahead with this plan, they might have to reconsider the ban on cryptocurrencies or provide an alternative to the existing ones. It is rumored that China and India are working on a secret plan to bring its own digital currency.

While exact date or time is not known, the general perception is that these countries have begun research and development process for the digital currencies.

This wide acknowledgement of the opportunities and potential of the cryptocurrency, alongside the regulatory challenges, should be seen as a very positive step. Who knows, the ban is reversed sometime soon, or the country makes some surprise announcements. Till then, wait and see!