Forex Reforms Will ‘Deal With Cryptocurrency,’ Says Chinese Government

Fresh but somewhat vague statements from the Chinese State Administration of Foreign Exchange reveal a new push to clarify the country’s crypto approach.

China has hinted that its treatment of cryptocurrencies such as Bitcoin (BTC) may change again as it looks to reform its forex markets.

As Reuters reported on Dec. 24 citing a senior government official, a new research initiative will accompany the expansion of Beijing’s blockchain cross-border financing pilot platform.

China looks to control a new situation in forex

The platform, launched in March this year, is currently running as a pilot scheme in 19 provinces.

“We will gradually expand the scope of the pilot and the application scenarios of blockchain technology in cross-border financing and macro prudential management,” said Lu Lei, deputy head of the State Administration of Foreign Exchange. Lu added:

“At the same time, (the government) will push forward a prospective study on foreign exchange reforms to deal with cryptocurrency and explore the construction of the foreign exchange regulation and technology system under the new situation.”

Blockchain-not-Bitcoin remains

The comments are conspicuous, coming as China prepares to launch its central bank digital currency, which the central bank stressed will not have the characteristics of Bitcoin. 

“The currency is not for speculation. It is different to bitcoin or stable tokens, which can be used for speculation or require the support of a basket of currencies,” Mu Changchun, deputy director of the People’s Bank of China, or PBoC, commented on Dec. 22.

Activities, notably exchange, involving non-state controlled cryptocurrencies remain all but banned under a policy enacted in September 2017. 

Lu did not explicitly state how the results of the new reforms would impact the status quo. 

On blockchain, meanwhile, authorities remain committed to the propagation and expansion of use cases, among the most recent of which is using the technology for bond issuance.

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