Former Chinese Finance Minister Advocates for Crypto Examination Amidst US Bitcoin ETF Developments

Lou Jiwei emphasized the importance of China evaluating cryptocurrency advancements, especially as the United States alters its approach to Bitcoin ETFs.

During his address at the 2024 Tsinghua Wudaokou Chief Economists Forum held in Beijing, former finance minister Lou Jiwei called for a detailed examination of cryptocurrency trends.

As reported by Sina Finance, Lou articulated concerns regarding the risks that cryptocurrencies present to financial stability, including their volatility and potential use in illicit activities such as money laundering.

He also remarked on the United States’ evolving position on cryptocurrencies, especially following the Securities and Exchange Commission’s recent approval of spot Bitcoin (BTC) exchange-traded funds (ETFs).

Concerns Over Global Financial Stability

Lou cautioned about the adverse effects cryptocurrencies might have on global markets, particularly through their capacity to instigate financial instability due to rapid price changes.

He noted that digital currencies are already viewed as a longstanding threat to financial security, with implications for areas like anti-terrorism financing and Anti-Money Laundering (AML) efforts.

According to Lou, these risks necessitate thorough examination to protect financial systems from potential turmoil.

U.S. Policy Shift on Cryptocurrency

Lou remarked on the significant policy changes in the United States regarding cryptocurrency.

The former finance minister urged Chinese policymakers to remain vigilant of these international shifts in crypto asset perspectives.

He highlighted the necessity for in-depth studies on the risks and innovations associated with the digital economy, particularly following the U.S. acceptance of cryptocurrencies in its financial ecosystem.

“[…] we also need to study the latest international changes and policy adjustments because they are crucial for the development of the digital economy.”

China’s Dominance in Crypto Hashrate

Despite implementing a comprehensive ban on Bitcoin mining and trading which commenced in 2021, China maintains control over 55% of the BTC mining network through its mining pools.

In a post on September 23, Ki Young Ju, who is the founder and CEO of CryptoQuant, noted that while this mining dominance exists, there is a gradual transition of power toward U.S. mining companies.

Ju pointed out that U.S.-based pools now manage approximately 40% of all BTC mining activities, primarily serving institutional miners, while Chinese pools tend to support smaller miners in Asia.