1. Cryptocurrency’s Threat to Financial Stability
2. The U.S. Shift on Bitcoin ETFs
3. China’s Mining Dominance

During the Tsinghua Wudaokou Chief Economists Forum in Beijing, former Chinese finance minister Lou Jiwei called for a thorough analysis of the rapid advancements in cryptocurrency. His comments reflect concerns within China's financial sector about the impact of digital currencies on global markets.

Cryptocurrency’s Threat to Financial Stability

Lou highlighted the risks posed by cryptocurrencies, particularly their notorious volatility and potential use in illegal activities like money laundering. Speaking at the forum, he cautioned that while digital assets may offer innovative opportunities, they also present significant threats to financial security. According to Lou, digital currencies could destabilize global financial markets because of their unpredictable price movements. Anti-Money Laundering (AML) and terrorism financing concerns must be carefully analyzed to safeguard financial systems from unexpected shocks.

The U.S. Shift on Bitcoin ETFs

Lou's speech also touched upon the major policy shift in the United States, where the Securities and Exchange Commission (SEC) recently approved Bitcoin Exchange-Traded Funds (ETFs). This signals a broader acceptance of cryptocurrency in U.S. financial markets. Lou urged Chinese policymakers to closely monitor these international developments, emphasizing the importance of understanding both the risks and innovations brought by the digital economy, especially as Western countries adjust their regulatory approaches to cryptocurrencies.

China’s Mining Dominance

Despite China's 2021 ban on Bitcoin mining and trading, the country remains a dominant player in the cryptocurrency space. Lou highlighted that China still controls over 55% of the global Bitcoin mining network through mining pools. However, the balance of power is gradually shifting. U.S.-based mining pools now manage around 40% of Bitcoin's mining operations, primarily catering to institutional miners.

Lou Jiwei's comments underscore the need for careful analysis and monitoring of digital currencies to ensure financial stability. His remarks reflect growing concerns within China's financial sector about the impact of cryptocurrencies on global markets and highlight the importance of international cooperation in regulatory policy.