The Central Bank's "2024 China Financial Stability Report" shows a shift in attitude towards encryption assets.

Recently, the "2024 China Financial Stability Report" was released, detailing the latest developments in global cryptocurrencies and related legislation for the first time, with a particular focus on Hong Kong's practices in the cryptocurrency field. This not only reflects the Central Bank's changing attitude towards encryption assets but also indicates our country's ongoing attention and gradual exploration of this emerging industry.

Central Bank's Shift in Attitude Towards Encryption Assets

Compared to the report of 2023, the financial stability report of 2024 shows a significant change in attitude towards encryption assets. The 2023 report mainly focused on the financial and technical risks of encryption assets, emphasizing their potential impact on financial stability and proposing strict regulatory measures.

In the report for 2024, the Central Bank's attitude towards the encryption asset market is more objective. Although it still emphasizes the risks, it also focuses on the market recovery and global development trends, and objectively comments on the legislative practices of various countries in cryptocurrency regulation.

The report pointed out:

• Despite the risk events in the encryption asset market, prices and trading volumes rebounded in 2023, while there are still potential risks such as large price volatility and lack of transparency in market governance.
• Multiple countries around the world have introduced relevant regulations to strengthen the supervision of encryption assets.
• Hong Kong, China has made positive progress in exploring the management of encryption asset licenses, strengthening regulation of virtual asset trading platforms.

These contents suggest that our country's financial regulatory authorities are paying attention to the compliance process of the encryption market and may adapt to the current changes through more legislation and policies.

Hong Kong's cryptocurrency practices attract attention

The report provides a detailed explanation of Hong Kong's innovative practices in the cryptocurrency sector. Hong Kong has implemented a "dual-license" regulatory system, categorizing virtual asset trading platforms into securities-type and non-securities-type, each subject to different legal regulatory frameworks.

This innovative regulatory model has sparked widespread discussion in the market, becoming a feature of Hong Kong's encryption asset market. By distinguishing between "security tokens" and "non-security tokens", Hong Kong has built a more detailed and flexible regulatory framework that enhances the compliance awareness of market participants while ensuring market norms.

Many experts and scholars are closely monitoring the development trends of relevant industries in Hong Kong and are formulating and improving related regulations to adapt to the financial environment under the new situation.

Central Bank's Focus 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. Countries are actively studying how to effectively regulate this emerging asset, exploring its potential value while ensuring financial stability.

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

The Prospects of the Cryptocurrency Market

Although the regulation of the cryptocurrency market is still in the exploratory phase, the "2024 China Financial Stability Report" indicates that the Central Bank's attitude towards cryptocurrency is changing. The practical experience in Hong Kong has drawn more attention to the market prospects of the industry. Globally, the regulatory framework for cryptocurrency is gradually improving, and the innovation and standardization processes in related industries are accelerating.

Expert Opinions

From the regulator's perspective, each platform should accept appropriate supervision to ensure that activities are legal and compliant. The focus of regulation should be to provide clear and explicit laws to avoid misjudgment of legitimate transactions.

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, cryptocurrency-related activities in mainland China still easily involve illegal financial activities. Without the "loosening" of relevant laws, mainland investors face high legal risks when participating in the encryption financial sector.

Remind all investors that encrypted financial products have high-risk characteristics and require enhanced compliance awareness. Non-professional investors or individuals lacking relevant experience and knowledge should treat this with caution, avoid blind entry, and prevent investment behavior from degenerating into high-risk "gambling."

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