- Former Chinese Finance Minister, Lou Jiwei, said in a speech on Saturday that despite the risks to financial stability posed by digital assets, China must closely study international developments to avoid being left behind.
- Jiwei’s comments come after the US has dramatically changed its stance on digital assets this year, with the SEC approving both Bitcoin and Ethereum spot ETFs, and both presidential candidates now sounding support for the digital assets industry.
The former Chinese Finance Minister, Lou Jiwei has warned of the risks cryptocurrencies pose to global economic stability in a speech delivered at the 2024 Tsinghua Wudaokou Chief Economists Forum in Beijing on September 28.
While wary of the risks, Jiwei also said China must study crypto closely and understand global developments around digital assets, highlighting the recent launch of Bitcoin spot ETFs in the US and the growing acceptance of digital assets by both major US political parties.
Related: Kamala Harris Promises to Make US “Dominant in Blockchain”
Crypto Is a Risk, But China Must Keep Up, Says Jiwei
According to a report in Sino Finance, Jiwei emphasised the risks to financial stability posed by cryptocurrencies, saying:
It does have a negative impact. We must fully recognize its risks and harm to the capital market.
Lou Jiwei, Former Chinese Finance Minister (Translated from Mandarin)The former Chinese Finance Minister also referenced the changing attitudes towards crypto in the US, where after over a decade of hostility both major political parties are showing strong signs of warming to blockchain technology.
He explained that it’s vital that China closely study these moves, both in the US and other jurisdictions, saying crypto will play an important role in the future of the global economy:
We must study the latest international changes and policy adjustments, because it is a crucial aspect to the development of the digital economy.
Lou Jiwei, Former Chinese Finance Minister (Translated from Mandarin)In 2024 The US Started to Embrace Crypto
2024 has been a huge year for crypto in the US. Way back in January the SEC signed-off on the launch of numerous Bitcoin-based spot ETFs. We then saw Ethereum spot ETFs launch in July.
We’ve also seen both candidates for the US presidential election embrace digital assets, although Trump has been far more outspoken in his support, declaring he wants to make the US the “crypto capital of the planet”.
There’s also been a gradual shift of Bitcoin hashrate from China to the US since 2022, with the US now controlling around 40% of the hashrate, up from about 15%. Despite this growth though, China still dominates the global hashrate, controlling about 55% despite the country ostensibly having a total ban on Bitcoin mining.
#Bitcoin hashrate dominance is shifting to U.S. mining companies.
Chinese mining pools operate 55% of the network, while U.S. pools manage 40%.
U.S. pools primarily cater to institutional miners in America, while Chinese pools support relatively smaller miners in Asia. pic.twitter.com/kepopLWBSD
— Ki Young Ju (@ki_young_ju) September 23, 2024
All of these shifts have obviously not gone unnoticed by Jiwei. Given the focus of his speech, it now seems the political elite in China may be getting a little concerned that the country is on the back foot when it comes to exploiting the opportunities presented by digital assets.
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