Central Bank “2024 China Financial Stability Report” Reveals Shift in Attitude Towards Encryption Assets

The recently released “2024 China Financial Stability Report” details the latest developments in global cryptocurrency and related legislation for the first time, with a particular focus on Hong Kong’s practices in the cryptocurrency sector. This report not only reflects the Central Bank’s changing attitude towards encrypted assets but also showcases our country’s ongoing attention and gradual exploration of this emerging industry.

The Central Bank’s Shift in Attitude Towards Encryption Assets

Compared to the report of 2023, this year’s report shows a significant change in attitude towards encryption assets. The 2023 report primarily focused on the risks of encryption assets, highlighting their potential impact on financial stability and proposing strict regulatory measures.

The report for 2024 adopts a more objective stance. While it still emphasizes the risks of encryption assets, it also focuses on market recovery and global development trends, providing an objective commentary on the legislative practices of various countries regarding cryptocurrency regulation.

The report points out that despite a series of risk events in the encryption asset market, market prices and trading volumes have rebounded in 2023. At the same time, regulatory authorities in various countries are strengthening their supervision of encryption assets, and several countries have introduced relevant regulations.

Cryptocurrency Practices in Hong Kong

The report particularly focuses on Hong Kong’s innovative achievements in the cryptocurrency field. Hong Kong has implemented a “dual-licensing” regulatory system, categorizing virtual asset trading platforms into securities and non-securities types, and applying corresponding legal frameworks for regulation. This innovative model has sparked widespread discussion in the market and has become a characteristic of Hong Kong’s crypto asset market.

By distinguishing between “security tokens” and “non-security tokens”, Hong Kong has built a more detailed and flexible regulatory framework. This not only ensures the orderly operation of the market but also enhances the compliance awareness of market participants. Hong Kong’s practice provides valuable references for other regions in the field of encryption asset regulation.

Attention to Global Stablecoins

The report repeatedly mentions the Central Bank of China’s concern about global stablecoins. As an important branch of cryptocurrency, stablecoins have become a research hotspot in the global financial market due to their relatively stable value mechanism. Countries are actively researching how to effectively regulate this emerging asset while ensuring financial stability and exploring its potential value.

The Central Bank’s attention to global stablecoins reflects our country’s forward-thinking in financial stability and insight into new trends in the international financial industry. This is not only a response to changes in the global market but also demonstrates our country’s gradual involvement and exploration in the encryption currency field.

The Prospects of the Cryptocurrency Market

Although the regulation of the cryptocurrency market is still in the exploratory stage, the “2024 China Financial Stability Report” indicates that the Central Bank of China is changing its attitude towards cryptocurrency. The practical experience in Hong Kong has drawn more attention to the market prospects of the industry. Globally, the regulatory system for cryptocurrency is gradually improving, and the innovation and standardization processes of related industries are accelerating.

Professional Advice

From a regulatory perspective, major platforms should accept appropriate supervision to ensure that activities are legal and compliant. The focus of regulation should be on providing clear and explicit regulations to avoid misjudgment of legitimate transactions.

In terms of law enforcement, public power should be supervised to avoid damaging the ecological development of the industry in gray areas.

For financial investment activities, currently in mainland China, activities related to cryptocurrency may still involve illegal financial activities. Before the relevant laws are “relaxed”, investors in mainland China face higher legal risks when venturing into the cryptocurrency finance sector.

Investors are reminded that the risks of cryptocurrency financial products are relatively high, and there is a need to strengthen compliance awareness. Non-professional investors or individuals lacking relevant experience and knowledge should approach with caution to avoid entering blindly.

With the optimization of the regulatory environment, investors, financial institutions, and government departments need to continuously enhance their understanding and adaptability to the financial system and market dynamics.