Huan Yiping, a professor of finance and economics at Peking University's National School of Development and a former member of People's Bank of China's monetary policy committee has published an article on why China banned crypto.
According to him, there are several things to consider when determining a stand on crypto. As per Yiping, there is no fundamental value of crypto and Bitcoin is akin to a digital asset and not an actual currency. Moreover, according to studies, more than 25% of all Bitcoin accounts and 50% of all trading activity are connected to criminal activities.
Yiping writes that China still has serious money laundering and that is the primary reason China has banned crypto trading.
And allowing the trade of digital assets like crypto will have negative effects.
Yiping writes that its crucial to take into consideration the long term pattern as he thinks banning crypto might be workable in a shorter term but it's also important to look into whether it will be viable in the longer term. The formal financial system benefits from the latest crypto technology like tokenization, blockchain technology, distributed ledger etc and therefore long term restrictions on Bitcoin may leave out people from technological advancements and restrictions may not last for long.
Yiping concludes that for developing nation, there is no particular ideal prescription for how crypto should be governed and affective strategy still needs to be established.