Amid increasing discussions surrounding the crypto regulation landscape, a former senior official from China’s Ministry of Finance has urged the government to reconsider its stringent ban on virtual assets.

According to a South China Morning Post report, Zhu Guangyao, vice minister from 2010 to 2018, highlighted the importance of cryptocurrencies to the Asian country’s digital economy at a recent economic forum in Beijing.

Calls For Reconsideration Of Crypto Ban

Zhu’s remarks come at a time when the United States has significantly altered its cryptocurrency policy, prompting experts in China to advocate for a similar reevaluation.

The former minister highlighted that while cryptocurrencies pose certain risks—such as capital market volatility and potential misuse for illegal activities—they are also essential for advancing the digital economy.

In 2017, the Chinese government banned initial coin offerings (ICOs) and ordered the closure of crypto exchanges. This crackdown intensified in 2021 when authorities prohibited Bitcoin (BTC) mining activities and declared crypto-related businesses illegal.

The overarching rationale behind these measures concerns financial stability and the potential for cryptocurrencies to facilitate criminal activities, including money laundering and terrorist financing.

However, Zhu pointed out that the concerns associated with cryptocurrencies could be effectively managed through regulation rather than outright bans. He noted, “Our current gap [with the US] is that we don’t participate,” suggesting that underground trading channels continue to operate without governmental oversight despite existing restrictions.

Trump Urges Adoption, Harris Supports Innovation

As China maintains its strict regulatory stance, Hong Kong has been moving in a different direction. The region is actively developing its cryptocurrency market to become a global hub for digital assets, operating under a separate legal framework that enjoys tacit approval from Beijing.

This divergence between Hong Kong and Beijing is further showcased by the recent approval of the crypto exchange-traded funds (ETFs) market earlier this year, which directly invested in the two largest cryptocurrencies on the market Bitcoin and Ethereum (ETH).

The changing dynamics of the global market have not gone unnoticed by political figures in the US, led by Republican candidate and former President Donald Trump, who has stressed the need for the US to embrace digital assets to avoid allowing China to dominate the space.

Similarly, after months of silence on the virtual asset industry, Democratic presidential candidate Kamala Harris has expressed support for innovative technologies, including digital assets, to regulate this sector for its growth.

Wang Yang, a prominent academic, also criticized China’s ban on cryptocurrency mining, referring to it as “very unwise,” as it inadvertently shifted business opportunities to the US.

Yang warned that if former president Trump were to regain his seat in the Oval Office, China might face increased “financial isolation,” potentially being removed from the SWIFT financial messaging system.

Echoing these sentiments, economist Huang Yiping, a former monetary policy committee member at the People’s Bank of China, has questioned the long-term sustainability of the cryptocurrency ban, suggesting that it could hinder China’s ability to capitalize on blockchain technology and other innovations.

Ultimately, it remains to be seen whether the government will implement a new regulatory framework to be at the forefront of digital asset adoption or maintain its current stance, with the knowledge that the nascent sector has become increasingly important to the global economy.