Colin Wu, a blockchain journalist, has released an exclusive report about Huang Yiping, a former member of the People’s Bank of China’s Monetary Policy Committee, explaining why the government outlawed cryptocurrency.
According to Yiping, there are a number of considerations to weigh before adopting a position on cryptocurrencies. To begin, the absence of centralization and centralized control makes cryptocurrencies like bitcoin more like digital assets than currency.
Even more sobering is the fact that research has connected around 25% of all Bitcoin account holders and 50% of all trading activity to illicit activities.
Second, as mentioned by Yiping, the regulatory stance towards cryptocurrencies and digital assets is dependent on the development of the national financial system and regulatory framework.
The fundamental cause is that the United States is still fighting serious problems with combating money laundering. And because the government still has numerous capital account limitations in place, allowing cryptocurrencies and other digital assets to be exchanged freely would create more issues than it would solve.
In conclusion, it’s important to take long-term patterns into account. A ban on cryptocurrencies may make sense in the near term, but its long-term viability warrants careful consideration.
Tokenization, distributed ledgers, blockchain technology, and so on are all examples of novel digital technologies made possible by cryptocurrencies that have been used in the conventional financial system.
Prolonged prohibitions on bitcoin trading and associated activities may be unsuccessful, and doing so might mean losing out on significant digital breakthroughs.
“There is no particularly good recipe for how cryptocurrencies should be regulated, especially for a developing country, but ultimately an effective approach may still need to be found.”