China’s Crypto Clampdown Persists: PBOC Appointment Dashes Hopes

• China’s crypto crackdown continues: PBOC appointment reinforces strict regulations.
• New appointment creates ambiguity in how China’s crypto stance will progress.
• Hong Kong takes a proactive approach with a new licensing system for virtual asset service providers.

Recent developments at the People’s Bank of China (PBOC) have dampened speculation surrounding a potential relaxation of the ban on digital asset trading in the country.

Prominent figures in the industry, including Jeremy Allaire, CEO of Circle Internet Financial Ltd., had pointed to Beijing’s support of Hong Kong’s aspirations to become a cryptocurrency hub as a sign that China might reconsider its stance. However, the appointment of Pan Gongsheng as the top Communist Party official at the PBOC has prompted a rethink.

This appointment indicates a continuation of existing policies at the institution, which categorically declared all crypto-related transactions illegal in 2021. Moreover, it positions Pan as a potential contender for the role of PBOC governor. Pan’s appointment, announced on Saturday, also brought attention to some noteworthy remarks he made in the past during a crackdown on cryptocurrencies.

Pan has a history of expressing anti-bitcoin sentiment

In 2017, local media reported Pan citing an analysis by Eric Pichet, a professor at Kedge Business School, stating, “If you sit by the river and watch, one day the corpse of Bitcoin will float in front of you.” These comments reflected his support for regulatory action against cryptocurrencies and his concerns about the potential consequences if China had not taken measures to restrict digital assets.

As a result, industry executives and observers are reminded of the firm stance China has taken against cryptocurrencies and the unlikelihood of an immediate change in policy. Pan Gongsheng’s appointment underscores the government’s commitment to its existing regulatory approach, dimming hopes for a significant shift in China’s stance on digital asset trading.

Liang Fengyi, CEO of the China Securities Regulatory Commission (CSRC), has revealed that Hong Kong will introduce a new licensing system for virtual asset service providers this month.

The implementation of this regulatory framework is designed to provide comprehensive coverage for all aspects of virtual assets. Its primary objectives are to safeguard investor interests and mitigate the risks faced by financial institutions operating in this sector.