Central Bank's Shift in Attitude Towards Encryption Assets: Interpretation of the 2024 China Financial Stability Report

Recently, the release of the "2024 China Financial Stability Report" has attracted widespread attention in the industry. This report provides a detailed account of the latest developments in global encryption and related legislation for the first time, with particular emphasis on Hong Kong's practices in the cryptocurrency field. This not only reflects the Central Bank's changing attitude towards encryption assets, but also demonstrates 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 from 2023, this year's report adopts a more objective and neutral tone in describing encryption assets. 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 in terms of regulation.

The report points out:

• Although the encryption asset market has experienced a series of risk events, the market price and trading volume have rebounded in 2023.
• Regulatory bodies in various countries are strengthening their oversight of encryption assets, and multiple countries have introduced relevant regulations.
• Hong Kong is making positive progress in exploring the management of encryption asset licenses.

These statements suggest that our country's financial regulatory authorities are closely monitoring the compliance process of the market and may adapt to current changes through more legislation and policies.

The cryptocurrency practices in Hong Kong are attracting a lot of attention.

The report elaborates in detail on Hong Kong's innovative achievements in the cryptocurrency sector. As an important part of the financial system in mainland China, Hong Kong's regulatory practices have received significant attention from the state.

Hong Kong's "dual licensing" regulatory system classifies virtual asset trading platforms into two categories: securities-based and non-securities-based, each subject to their respective legal frameworks. This innovative model has not only sparked heated discussions in the market but has also become a distinct feature of Hong Kong's encryption asset market.

By clearly distinguishing between "security tokens" and "non-security tokens," Hong Kong has constructed a more detailed and flexible regulatory framework, ensuring the orderly operation of the market while also enhancing the compliance awareness of market participants. This practice in Hong Kong provides valuable reference for other regions.

Central Bank's Attention on Global Stablecoins

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

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

The Prospects of the Cryptocurrency Market

Although the regulation of the cryptocurrency market is still under continuous exploration and in-depth research, the "2024 China Financial Stability Report" indicates that the Central Bank's attitude towards cryptocurrencies is changing. The practical experience in Hong Kong has garnered more attention to the market prospects of this industry. Globally, the regulatory framework for cryptocurrencies is gradually being improved, and the innovation and standardization processes in related industries are also accelerating.

Professional Opinions

From a regulatory perspective, major platforms should accept appropriate supervision to ensure that activities are conducted within a legal and compliant framework. The focus of regulation should be on providing clear and explicit legal texts to avoid misjudgments regarding legitimate and lawful trading activities.

From the perspective of law enforcement, public power should be supervised and should not act recklessly in gray areas, undermining the ecological development of the industry.

In terms of financial investment activities, current activities related to cryptocurrencies in mainland China may still involve illegal financial activities. In the absence of a "de-regulation" of related laws, mainland investors face a higher legal risk when venturing into the field of encryption finance.

Reminder to all investors: encryption financial products have high-risk characteristics, and participants need to enhance compliance awareness. Non-professional investors or individuals lacking the corresponding experience and knowledge should approach with caution to avoid blindly entering the market.

As the regulatory environment continues to improve and mature, investors, financial institutions, and government departments must continuously enhance their understanding and adaptability to the evolving financial system and market dynamics.