Former Finance Minister Urges China to Reevaluate Crypto Strategy as U.S. Approves Bitcoin ETFs

At the 2024 Tsinghua Wudaokou Chief Economists Forum in Beijing, Lou Jiwei, China's former finance minister, emphasized the importance of reassessing cryptocurrency developments, particularly given the evolving stance of the United States toward Bitcoin ETFs.

In his speech, Lou urged Chinese policymakers to closely monitor advancements in the crypto sector, warning of potential threats to financial stability. Citing a Sina Finance report, he highlighted concerns over cryptocurrency volatility and its role in facilitating activities like money laundering.

The former minister underscored the significance of the U.S. Securities and Exchange Commission’s recent approval of spot Bitcoin exchange-traded funds (ETFs). He pointed out that this policy shift could have a substantial impact on global financial markets, making the case for China to remain vigilant about cryptocurrencies' potential to disrupt the economy.

Lou stressed that digital currencies have long been recognized as a threat to financial security, especially regarding anti-terrorism financing and Anti-Money Laundering (AML) measures. He advocated for a comprehensive study of these risks to safeguard China’s financial systems from potential shocks.

Despite China's blanket ban on Bitcoin mining and trading implemented in 2021, Lou noted that the country still controls over 55% of the Bitcoin mining network through mining pools. However, this dominance is gradually shifting. Ki Young Ju, the CEO of CryptoQuant, highlighted in a September 23rd post that U.S. mining firms now manage around 40% of all Bitcoin mining operations, primarily serving institutional miners, while Chinese pools support smaller miners in Asia.

Lou Jiwei's call to action serves as a reminder that despite China's regulatory stance, the global cryptocurrency landscape is evolving rapidly, and China's policymakers must stay informed and adaptable to these changes.