Tech
Hong Kong professor calls China’s cryptocurrency mining ban ‘unwise’, suggests opening up to digital assets
A professor at the Hong Kong University of Science and Technology (HKUST) has questioned the logic of China’s cryptocurrency mining ban, suggesting the government should embrace virtual assets amid geopolitical risks.
Banning cryptocurrency mining entirely in China was “very unwise” as it pushed related companies to relocate to the United States, contributing to U.S. tax revenues, Wang Yang, vice president for institutional advancement and associate professor at the Department of Mathematics at HKUST, said at a panel discussion in Hong Kong last week.
China may order state-owned enterprises to acquire shares in domestic cryptocurrency firms to control risks such as capital outflows and money laundering, Wang said at a June 26 event hosted by Hong Kong-based virtual asset firm HashKey Exchange.
Wang is the latest to question China’s hostile attitude toward cryptocurrencies, as Beijing continues to crack down on the sector in mainland China, even as it supports Hong Kong’s efforts to develop the sector.
HKUST Vice President for Institutional Development Wang Yang. Photo: Handout
Hopes that China would open its market to the cryptocurrency sector have grown in recent years, as the Hong Kong Special Administrative Region has taken the first steps to build a virtual asset sector. Efforts have included licensing cryptocurrency exchanges and launching exchange-traded funds that invest directly in cryptocurrency tokens, although Chinese regulators have given no indication they would allow the same in mainland China.
After banning initial coin offerings and ordering the closure of exchanges in 2017, the Chinese government went even further, banning bitcoin mining in 2021 and outlawing all cryptocurrency-related activities, saying they disrupted the economic and financial order and provided a breeding ground for criminal activity.
At the end of 2022, Chinese economist Huang Yiping, a former member of the People’s Bank of China’s monetary policy committee, said in a speech that China should consider whether its strict cryptocurrency ban was sustainable in the long term, as it could mean missing out on opportunities in technologies like blockchain. Such technologies are “very valuable” to regulated financial systems, Huang said at the time.
The possibility of Hong Kong becoming a gateway for cryptocurrency firms to the vast mainland Chinese market was a major theme at a Bitcoin industry conference held in the city earlier this year.
In an interview with the Post last month, Brock Pierce, co-founder of the largest stablecoin Tether, suggested that China’s opening to cryptocurrencies was a matter of “when” rather than “if.”
Last week, HKUST’s Wang also floated the idea of tokenization as a response for China amid rising decoupling risks. If former U.S. President Donald Trump were to return to office, China could be removed from Swift’s financial messaging system or at least restricted, Wang said.
“If that’s the case, the market could open up,” Wang said. “I think there will be a turning point in three years, when people will reconsider what digital assets are and whether they are harmful.”