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Why has China consistently not opened up cryptocurrency trading?

China's strict restrictions on cryptocurrency trading are due to various reasons, which are related to national strategy and economic management, as well as risk control and social stability. Here are several key reasons:
1. Priority of Financial Stability
The Chinese government places great importance on the stability of the economy and financial system. The price volatility of cryptocurrencies is extremely high; if the trading market overheats, it may lead to speculative behaviors that threaten the overall security of the financial system.
2. Control of Capital Outflow
Cryptocurrency trading provides convenient channels for capital outflow. China has been working to prevent funds from flowing out of the country through illegal or uncontrollable means, and cryptocurrencies, due to their decentralized and hard-to-trace characteristics, can easily become tools for circumventing capital controls.
3. Combating Illegal Activities
Cryptocurrency trading can easily be used for illegal activities such as money laundering, fraud, and terrorist financing. The Chinese government attempts to reduce these potential criminal risks by banning exchanges and ICOs (Initial Coin Offerings).
4. Development of Central Bank Digital Currency (CBDC)
China is the first in the world to launch a central bank digital currency (Digital Renminbi, DCEP), aimed at strengthening control over currency issuance and circulation. If cryptocurrency trading is allowed to occur freely, it may compete with the digital renminbi, undermining the central bank's monetary policy tools.
5. Skepticism Towards Lack of Physical Backing
The Chinese government holds a cautious attitude towards assets (such as Bitcoin) that lack physical backing or intrinsic value. Although blockchain technology is widely recognized, the government prefers it to be used to promote the real economy rather than for speculative asset trading.
6. Protecting Ordinary Investors
Due to the extreme volatility of the cryptocurrency market and lack of regulation, ordinary investors can suffer huge losses in irrational market frenzies. The Chinese government believes that banning cryptocurrency trading is meant to protect the public interest.
Possible Directions for the Future?
Despite China's prohibitive stance on cryptocurrency trading, it has not denied the value of blockchain technology. On a technological level, China is actively promoting blockchain innovation and has made significant progress in some areas. For example, the Blockchain Service Network (BSN) supported by the Chinese government is seen as an important platform for promoting the development of global blockchain applications.
What do you think of China's strategy?