Editorial | China moves to take a clear-sighted approach to cryptocurrencies

Cryptocurrencies have no future as a medium of exchange in China. They may, however, be tolerated as an investment asset class, at least for now.

While other governments have been dithering and taking a wait-and-see approach, Beijing has charted a course for financial stability, a sovereign digital currency and environmental protection in which cryptocurrencies will be highly disruptive and therefore not be allowed to function as alternative fiat money. This is policy planning at its most consistent and logical.

Other economies may pursue their own policies on cryptocurrencies, but China cannot be faulted – indeed may be praised – for being clear-sighted.

Three state-backed financial associations have issued a new warning to member institutions that providing any financial services and transactions using cryptocurrencies is illegal and even criminal. As China makes its way to become a cashless society, authorities have been slowly rolling out the digital yuan, the online version of its sovereign currency.

The new warning clearly aims to distinguish the digital currency issued by the central bank from unauthorised cyber-currencies. Indeed, the PBOC republished the joint statement, reiterating that cryptocurrencies are not classified as money as they have no “intrinsic value” and can be “easily manipulated”.