The prospects of cryptocurrencies in China: In-depth reflections on changing times and policy cycles

Regarding whether China will open up to cryptocurrencies in the future, this question cannot be answered simply with yes or no. It requires understanding from two dimensions: historical evolution and economic structure.

Historical Perspective: Today’s Ban May Not Be the Norm Tomorrow

The times are constantly evolving. Looking back over the past decades, behaviors that were once strictly regulated or considered serious violations of the law are no longer problematic today. This reflects a fundamental principle: institutions and policies often lag behind social development and need sufficient time to adapt to new objective conditions. Similar examples include the evolution of juvenile detention education systems, from harsh punishments to humane reforms, which also experienced a long process of cognitive change. The same applies to cryptocurrencies; current regulatory policies do not represent a permanent stance.

The Objective Value of Cryptocurrencies Cannot Be Denied

The reason cryptocurrencies have survived until today and remain vibrant is not due to hype or conceptual packaging, but because they offer tangible advantages in cross-border transactions and the security and efficiency of capital flows. These address real market demands. The underlying technical logic and use cases are objective and do not disappear due to the policies of a single country. This is the fundamental reason why cryptocurrencies can exist globally.

The Real Reasons for Strict Regulation at Present

The current strict regulation of cryptocurrencies is not because cryptocurrencies have fundamental flaws, but because the domestic economic structure has inherent mechanisms to prevent and control them.

Specifically: domestic asset prices are generally higher than similar overseas assets, and capital controls restrict cross-border capital flows to balance outflows; at the same time, during economic downturns, credit injection is needed to support asset prices and maintain financial stability. The emergence of cryptocurrencies is like a “vulnerability” in a microeconomic system, which can accelerate capital outflows and threaten the financial balance built on controls. Therefore, strict regulation becomes a necessary defensive measure.

Future Possibilities: When Will Relaxation Occur

Policy shifts often require changes in the economic foundation. When the following conditions are gradually met, there may be opportunities for policy adjustments regarding cryptocurrencies:

• Asset bubbles are cleared, and domestic and overseas asset price gaps narrow
• The internationalization of the Renminbi advances significantly, and the degree of capital account opening increases
• The economic structure is optimized and upgraded, reducing the urgency of credit support

However, China’s current economy is in a “balance sheet recession” adjustment cycle. The repair cycle for deleveraging, resolving local government debt, and upgrading industrial structures is not short. This means that meeting the above conditions will take considerable time.

Conclusion: Clear Direction, Time Not Yet

Cryptocurrencies, as a form of financial innovation and technological solution, have an objective and irreversible development trajectory; but the realization of policy relaxation or opening in the Chinese market depends on the progress of domestic economic cycles and financial structural adjustments. In the foreseeable few years, cryptocurrencies will likely remain under existing regulatory control domestically. This is not a value judgment but a matter of timing and economic conditions. The overall trend is set; it’s only a matter of the speed of change.